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Home / News & IndustryManaged Care Insight and Analysis
Updated: April 27, 2010
California Insurers Deny 21 Percent Of Claims, Drawing State Probe

More than 1 of every 5 requests for medical claims for insured patients, even when recommended by a patient’s physician, is rejected by California’s largest private insurers, according to data released by the California Nurses Association/National Nurses Organizing Committee (CNA/NNOC).

Researchers analyzed data reported by the insurers to the California Department of Managed Care and found that from 2002 through June 30, 2009, six of the largest insurers operating in California rejected 47.7 million, or 22 percent, of all claims for care.

The findings have led to a statewide probe by state Attorney General Edmund G. Brown, Jr. as to how insurers pay claims.

"These high denial rates suggest a system that is dysfunctional, and the public is entitled to know whether wrongful business practices are involved," he said.

Brown’s deputies are pouring over HMO records and conducting interviews with individuals knowledgeable about HMO claims activities.

Leading the way in claims denials was PacifiCare, 40 percent in the first half of last year, followed by CIGNA’s 33 percent.

"The reality for patients today is a daily, cold-hearted rejection of desperately needed medical care by the nation’s biggest and wealthiest insurance companies simply because they don’t want to pay for it," said Deborah Burger, RN, CNA/NNOC co-president.

"Every claim that is denied represents a real patient enduring pain and suffering. Every denial has real, sometimes fatal consequences," she concluded.

PacifCare Life Facing Charges of Mishandling Fees

An administrative law judge is hearing arguments to determine if PacifiCare Life and Health Insurance Co. (PCLHI) violated California law by mishandling fees and claims continues. A decision is not expected until at least March.

In 2008, Commissioner of the California Department of Insurance Steven Poizner charged PacifiCare with thousands of violations of the California Insurance Code based on the insurer’s alleged failure to properly process claims from physicians, failure to meet its payment obligations on a timely basis, and a host of other improper claims paying practices.

The potential penalties are enormous – $5,000 per each violation and double that if the violations are found to be willful, said Darrel Ng, insurance department spokesman.

"The charges against PacifiCare are very serious," said Adam Cole, the department’s general counsel, who heads the prosecution team.

The alleged violations came on the heels of PacifiCare’s acquisition by United Health Group in 2008, now the largest health insurance company in the United States.

The insurance department has also started a follow-up market conduct examination of PacifiCare, following an initial market conduct examination; covering the period of June 23, 2006 to May 31, 2007, that disclosed the thousands of violations that served as the basis of the accusation.

Last year Insurance Commissioner Steve Poizner introduced regulations to prevent the practice of unfair rescissions in the individual health insurance industry. These regulations marked California’s first-ever regulatory steps to clarify rescission laws, preventing the industry practice of unfairly rescinding health insurance policies.

Addresses: California Nurses Association/National Nurses Organizing Committee, 2000 Franklin Street, Oakland, CA 94612; (510) 273-2200,, PacifiCare of California, P.O. Box 30968, Salt Lake City, UT 84130-0968; (800) 624-8822,

  This article was taken from:
Healthcare Reimbursement Monitor

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