Aetna, Cigna and BCBS hit with fines over improper denials in California

The California Department of Managed Health Care announced Dec. 18 that it has fined 12 health plans a total of $1.9 million for lack of oversight of a contracted medical group, which led to improper denials and delayed care.

The health plans, including Aetna Health of California, Cigna HealthCare of California and several Blue Cross Blue Shield plans, contracted with Employee Health Systems Medical Group to deliver care to Medi-Cal managed care enrollees. EHS sub-contracted its authority to provide care to SynerMed.

In 2017, SynerMed, which operated essentially as a single enterprise with EHS, was accused of improperly denying care to thousands of patients and falsifying documents to hide the scheme. The allegations against SynerMed were made by a whistleblower and summarized in an internal investigation report. According to the whistleblower's report, a small team at SynerMed routinely falsified denial letters without supervision from physicians or other clinicians. The falsified letters were allegedly often written solely to satisfy auditors and were not sent to the patients.

Within two days of a decision to deny coverage for services, Medicaid managed care companies and commercial health plans are required to provide members with a written denial notice. The notice gives patients the ability to appeal the decision with their health plan and then with regulators. However, SynerMed's compliance department determined the company did not properly inform patients, leaving thousands of members unaware of their appeal rights.

The California Department of Managed Health Care launched its own investigation after the whistleblower complaints were filed in 2017. The investigation revealed SynerMed, and therefore EHS and the health plans that contracted with the medical group, illegally restricted enrollees' access to healthcare services, according to a Dec. 18 announcement.

The investigation revealed that SynerMed had a special team whose goal was to pressure "high-cost enrollees" out of EHS. "The process of convincing enrollees to transfer frequently spanned weeks, during which time SynerMed unlawfully put a hold on the enrollees' requests for care," the California Department of Managed Health Care said in a release. In one case, the authorization involving a kidney transplant was delayed for more than 100 days.

The investigation also revealed that SynerMed restricted access to costly specialists and generated fake documents for audits to make it appear as if it had sent denial or modification notices to enrollees when it had not.

More articles on payer issues:

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