Anthem Pays $1.6 Million Settlement

Woodland Hills-based insurer Anthem Blue Cross of California has agreed to pay a $1.6-million settlement to seven hospitals after claims the insurer underpaid them for patient care, state health officials said. Six of the seven hospitals involved in the dispute are located in Los Angeles and Orange counties, with two of them located in the San Fernando Valley, said Lynne Randolph, spokeswoman for the California Department of Managed Health Care. The department is not releasing the hospitals’ names. The hospitals brought complaints to the managed health care department, showing cases between 2004 and 2007 in which the insurer denied reimbursement for patient care costs that went beyond the hospitals’ negotiated daily contracted rates. The claims for the additional costs are called stop-loss claims and are typically later reimbursed by insurers. The reimbursement denials were allegedly due to mishandling of the claims by Anthem. The state department found that the insurer required stop-loss claims to be mailed to a different address and under different deadlines than regular claims, according to settlement documents. In some instances, stop-loss claims sent to the regular claims unit were not forwarded to the proper unit, leading to incorrect processing and missed deadlines. Randolph said the practice clashes with current California law that requires health plans to pay providers fairly and on time. “This particular situation is not spelled out in regulation, but through the department’s investigation, we determined that was an example of unfair payment practice for their providers,” she said. Within the past couple of years, Anthem has changed the way it receives and accepts stop-loss payments. “(Anthem) agreed to make changes within their system, not only on the computer upgrades, but to make sure that all claims are sent to the same address, which was really the reason for these claims being denied,” Randolph said. She added that the changes have led to major reductions in denied claims reported by the company between 2007 and 2009. Anthem has denied allegations of mishandling and said it made or denied stop-loss payments in accordance with the terms of the provider contract, which includes timely filing provisions. “We are pleased to resolve our disagreement with the Department of Managed Health Care through a Consent Agreement, rather than litigation,” the company said in a statement. “The complaints at issue were generally four to six years old, and Anthem had since adopted processes to simplify stop-loss claim submission for contracted hospitals.”