When your health insurer pays a claim late, the interest charge is supposed to make it think twice.
However, when it refuses to pay after sitting on a claim for two months, there is no automatic penalty. That?s why the Maryland Insurance Administration recently fined CareFirst BlueCross Blue Shield $125,000 and ordered the state?s largest health insurer to clean up errors in claim handling.
This may be the first in a series of health insurance audits into claim denials, Associate Commissioner Todd Cioni said.
“CareFirst?s failure to pay denied claims in a timely manner is very high,” he said. “We will be doing other audits exclusively on denied claims.”
While the Insurance Administration found some errors in denying claims that should have been paid, most errors were the result of lack of training or computer errors, Cioni said. Claims were denied for lack of authorization when the proper forms were in the system, and benefits were mishandled for physical and occupational therapy. Improper denials based on pre-existing conditions were also issued .
The audit found that in excess of 15 percent of the cases, CareFirst failed to process these denials within 30 days as required by law.
A representative for CareFirst could not be immediately reached for comment.
According to a study of denied claims throughout 2004, the insurance agency found violations of the Health-General Article, the Insurance Article and the Code of Maryland Regulations, according to the consent agreement signed Tuesday.
“This is the first time that the [insurance agency] has conducted a focused audit of how denied claims are being processed by health carriers,” Insurance Commissioner Ralph S. Tyler said in a statement. “This is a particular concern, because the [agency] has a long-standing policy of enforcing prompt payment by health carriers. Both [patients] and health care providers need timely resolution of these matters.”
The investigation was spurred by consumer complaints, Cioni said. “Not only is the [agency] addressing reported problems on a case-by-case basis, but as part of its market analysis, we are also reviewing trends in consumer complaints to identify larger issues with process and procedures that lead to violations.”
He said he doesn?t expect to see any further violations and that the audit did not find any “malfeasance” on the part of CareFirst or its employees.
