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Guest Column

 State HMOs deny 1 in 5 claims, analysis shows
By Lisa Girion
Los Angeles Times

California HMOs reject one out of five medical claims, according to an analysis by the California Nurses Assn. of data the companies submit to the state.

The analysis -- the first of its kind based on state government-collected data -- concluded that from 2002 through June 30, 2009, five of the largest insurers in the state rejected 31.2 million claims for medical care, or 21% of all claims.

The denial rates ranged from a low for Aetna of 6.5% to a high for PacifiCare of 39.6%, for the first half of 2009. Anthem Blue Cross, the state's largest for-profit health plan, and Kaiser, the state's largest nonprofit plan, each rejected 28% of claims during the first six months of this year, according to the study. And Cigna denied 33%.

"Every claim that is denied represents a real patient enduring pain and suffering," said Deborah Burger, co-president of the organization. "Every denial has real, sometimes fatal, consequences."

But insurers cautioned that claim rejections reported to regulators do not always reflect actual denials of treatment to patients. And, they said, claims may be denied for a number of legitimate reasons.

"Health plans have strict requirements and meet the letter of their contracts with their members to make sure they pay all the claims they are supposed to," said Nicole Kasabian Evans, a spokeswoman for the California Assn. of Health Plans.

California health plans pay out more than $75 billion a year in medical claims, she said. "Health plans seriously question the data, especially given that it's coming from an organization that has a long-term political goal of government-run healthcare."

Don DeMoro, director of the nurses association's research arm, said the data is publicly available. "If you don't agree with the conclusions, get out your slide rule and do your own calculations," he said.

DeMoro said the association asked for the data a couple of years ago and was told that it wasn't collected.

It wasn't until recently, he said, that researchers stumbled across it on the Department of Managed Health Care's website. In a section of "schedule G" attached to their annual financial reports, each company lists monthly totals of claims received and claims denied.

Harvey Rosenfield, founder of Consumer Watchdog, a Santa Monica-based advocacy group, criticized the department for failing to analyze the data and make the public aware of it.

"There is no more important information to the consumer than whether they can rely on their health insurance company or HMO to give them the treatment they need," Rosenfield said.

The Department of Managed Health Care said that most denied claims don't involve patients.

"It's important to point out that a denied claim means that the patient received the medically necessary services, but the doctor or hospital was not paid for that care," said spokeswoman Lynne Randolph. "The department has been very active in ensuring that providers of care should be paid fairly and on time."

Randolph said the department's provider complaint unit has obtained almost $20 million in disputed claims payments for physicians since 2005.

The department posts insurers' financial reports on its website in an effort to provide transparency and information to consumers, she said.

The department also is actively investigating concerns that "have been raised about PacifiCare's claims denials," Randolph said. "The department's examiners are at the health plan right now reviewing its payment practices. This audit includes not only examining denied claims, but also is a follow-up to issues that resulted in a $3.5-million fine from the DMHC last year."

PacifiCare spokesman Tyler Mason said the denials reported to the department include claims that are rejected because the patients are no longer members of the health plan.

The reported denial rate "doesn't truly reflect an impact on the consumer," he said.

In PacifiCare's case, reported denials are higher than average because the company delegates the financial responsibility for many of its members' care to physician groups. PacifiCare does this by paying the physician groups a set monthly per-patient fee.

In exchange, these groups absorb most of the care costs. But they often submit claims to the company that PacifiCare turns back to them, Mason said. In such cases, patients receive treatment and are often unaware of any dispute over who pays, he said.

PacifiCare, which practices this model more heavily than other HMOs in the state, said it determined that 80% of the claims it reported as denied in the regulatory filing fall into this category.

Cigna's Chris Curran said that, nationwide, the company approves "more than 99% of eligible claims for care that the doctor recommends."

Peggy Hinz, a spokeswoman for Anthem Blue Cross, said some claims are denied because the insurer considers the requested treatment experimental. But the patient may receive some other course of treatment instead, she said.

In other cases, claims are denied because they seek payment for treatment not covered by the member's plan.

A spokesman said the reported denials do not reflect the vast majority of care provided within the Kaiser Permanente network.


Copyright 2009, The Los Angeles Times


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