Citing a litany of bungled claims, improper treatment denials, unlicensed health insurance agents, and poorly performing claims processors using out-of-date software, the New York Department of Insurance (DOI) has fined Aetna US Healthcare and UnitedHealthcare a total of $2.5 million.
The DOI describes poorly processed claims and violations of the state's insurance code in two recently released market conduct exams. The results of the exams have forced both insurers to create an appeals process for claims that had been partially or fully denied during certain time periods. Aetna will review claims it partially or fully denied between July 1, 1994, and Sept. 30, 2001. UnitedHealthcare will take another look at claims it partially or fully denied between July 1, 1994, and Dec. 3, 2001.
Advertisements detailing the appeals process are now running in newspapers in the plans' service areas. Additionally, Aetna can be contacted for claims reconsideration at (888) 305-7649. To initiate an appeal for UnitedHealthcare, call (866) 249-9171.
"Aetna fully understands the importance of accurate and timely claims processing and has taken significant steps to make improvements with regard to customer service," says Aetna spokesperson David W. Carter. "In the meantime, we will continue to work closely with the New York Department of Insurance to ensure compliance with appropriate laws and regulations."
In a statement, UnitedHealthcare says, "UnitedHealthcare cooperated fully and has corrected the deficiencies, which were generally technical in nature. The quality of patient care was not, and is not, an issue."
The DOI reports that there are "serious claims-processing deficiencies" with Aetna's system that make it difficult for the company to process claims "with minimal errors on a timely basis." For this and other violations Aetna was fined $1.5 million.
| In one instance, a claim was submitted to Aetna six times and improperly denied five times. |
According to the DOI's review of 668 claims submitted to Aetna between Jan. 1 and June 2000, 264 resulted in one or more claims-processing errors. Of these 264 claims, 205 contained financial errors. Given that Aetna's own internal performance measures show a score of 99 percent for procedural and financial accuracy, the DOI concludes "the examination findings show a significant gap."
In one instance, a claim to Aetna was submitted six times and improperly denied five times. DOI examiners say there is no evidence that Aetna's claim processors checked to see that the reason for the initial denial of payment was that a doctor's referral was missing. Even when a copy of the referral was attached, the claim was denied.
Part of Aetna's claims-handling problem, according to the DOI, is that its claim examiners may use "manual overrides" that bypass the computer software that guides the adjudication process. For example, of the 668 claim files the DOI reviewed, 193 files (20 percent) were processed using one or more manual overrides and, in nearly all cases, Aetna was unable to explain why a manual override was required.
The DOI contends that manual overrides "should never be considered a routine procedure in a tight control environment."
An outdated computer system that was used by UnitedHealthcare's claim processors didn't even contain New York's most recent health insurance mandates about the state's prompt-pay law, emergency room procedures, pregnancy, and pre-existing conditions. Additionally, the DOI determined the HMO violated a state law requiring health insurers to permit emergency room treatment if a "prudent layperson, acting reasonably," would have considered the situation a medical emergency. (See Emergency care: Know your rights.)
| UnitedHealthcare used a list of 16 emergency room diagnoses that it deemed not eligible for coverage. |
According to the DOI, during the examination period, UnitedHealthcare used a list of 16 emergency room diagnoses that it deemed not eligible for coverage, including strep throat or headache if the ailment was not treated with intravenous medication upon arrival at the emergency room. The DOI concludes that "an insured cannot know prior to the emergency room visit what treatment will be used." State examiners recommend that the HMO discontinue its use of the list and
consider each claim separately on its own merits.
UnitedHealthcare is also taken to task for being unable to provide proof of licensing for 71 percent of 76 general agents selling health insurance in New York, "nor was the Department's Consumer Services Bureau able to confirm such licenses exist." For these and other violations, UnitedHealthcare was fined $1 million.
According to the DOI, both Aetna and UnitedHealthcare have filed plans to correct their claims-handling deficiencies and other violations discovered during the examinations. Additionally, both have agreed to ensure that the date a claim is actually received is clearly stamped on the claim or otherwise entered into the companies' computer systems. Noting this date is critical to determine prompt-pay violations, and the DOI saw many instances where the date was missing.
Both companies also pledge to address the fact that each was unable in many instances to provide the DOI with copies of correspondence, referrals, or medical reviews for the claims reviewed. New York law requires insurers to keep all paperwork associated with a claim for six years after the claim is resolved.
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