DMHC Orders Health Net to Improve
Payments for Noncontracted Physicians
[Posted 01/20/05 ]

The Department of Managed Health Care last week fined Health Net $250,000 for systematically underpaying noncontracted physician claims for emergency care provided to plan enrollees. Health Net—the state’s fourth largest HMO—has also been ordered to reprocess noncontracted physician claims and correct claims that were underpaid.

DMHC determined that Health Net’s payments violated the Unfair Payment Practices Law, whose regulations went into effect January 1, 2004. The law was sponsored by CMA.

Between January 1, 2004 and October 12, 2004, DMHC estimates that 65,000 Health Net claims were incorrectly paid, totaling more than $6 million in underpayments. Health Net paid noncontracted physicians at 80 percent of Medicare.

Health Net is required by the ruling to automatically reprocess underpaid claims from noncontracted physicians who had previously appealed the underpayments. Even if you did not appeal an underpayment, you may still be eligible for reimbursement under this ruling. CMA will provide physicians with more information on the appeals process when it becomes available.

CMA has been insisting for years that DMHC investigate health plan underpayments for emergency and on-call care provided by noncontracted physicians. In September 2003, CMA asked physicians to submit clear-cut cases of health plan underpayment, and ER and on-call physicians sent more than 400 specific examples to CMA, which analyzed them and shared findings with the DMHC. For years, DMHC had been slow to act on physician complaints of unfair payment practices despite abundant evidence. CMA and the California Chapter of the American College of Emergency Physicians complained loudly in 2004 both to DMHC and to members of the Legislature, demanding enforcement of California’s Unfair Payment Practices Law.

CMA applauded the action taken by DMHC and its new director, Cindy Ehnes. “This is a huge advocacy victory,” says CMA CEO Jack Lewin, M.D. “This incredibly good news seems to indicate that the regulatory environment is finally changing to address our critical concerns.”

“This action hopefully evidences the more balanced enforcement activity promised by Cindy Ehnes, the new director of DMHC,” says Nileen Verbeten, CMA’s vice president of Economic Services.

Contact: Frank Navarro, 916/444-5532 or fnavarro@cmanet.org.