Slow Pay, Big Fine

UnitedHealthcare Docked $4 Million for Prompt Pay Violations

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Medical Economics Feature - March 2006  

By  Ken Ortolon
Senior Editor

Failure to meet state prompt payment regulations in 2004 and 2005 has netted UnitedHealthcare Insurance Co. and its Texas subsidiary the largest fine in Texas Department of Insurance (TDI) history.

And United could face up to $27 million in additional fines over the next two to four years if it doesn't clean up its act.

TDI officials say United's willingness to accept additional monitoring and potential fines gives them some "comfort" that it is serious about improving its prompt payment compliance.

That's fine, Texas Medical Association officials say, but physicians remain concerned about unresolved payment policies. Susan M. Strate, MD, of Wichita Falls, chair of TMA's Council on Socioeconomics, says the council will continue to pursue those issues.

In a December 2005 consent order from Insurance Commissioner Mike Geeslin, UnitedHealthcare Insurance Co. and UnitedHealthcare of Texas Inc. agreed to pay $4 million in fines. The fine included $2.5 million for violating a state law requiring health plans to pay 98 percent of clean claims on time. The additional $1.5 million was for not filing accurate and complete claims data reports with TDI and not maintaining accurate and complete complaint records and logs.

Finally, the order requires United to pay restitution to physicians and other health care professionals. Doctors who think United owes them money can file a complaint by using the TDI online complaint form at http://www.tdi.texas.gov/forms/consumer/cp012complform.pdf.

Sara Waitt, TDI senior associate commissioner for legal and compliance, says the fines resulted from TDI's regular monitoring of quarterly claims data and its review of United's application for state approval to buy PacifiCare Life Assurance Co. and its Texas affiliate, PacifiCare of Texas. Commissioner Geeslin approved the PacifiCare acquisition the same day he issued the consent order. Ms. Waitt says that was by design.

"We wanted them to get started with a clean bill of health, if you will, and they needed to clean some things up before we were real comfortable with them [acquiring PacifiCare]."

TDI says United did not meet the 98-percent prompt pay standard between Jan. 1, 2004, and March 31, 2005. The company also did not accurately report to TDI its claims-payment information for all of 2004 and the first three quarters of 2005.

TDI also found that United's internal complaint records and logs were not accurate.

Ms. Waitt says United's failure to meet the prompt payment requirements involved claims from physicians and other health care professionals, but a substantial portion of the claims paid late were pharmacy claims. She could not say how many of the late payments involved physician claims.

"Probably without the pharmacy [claims] they may have been within acceptable range," she said. "So the pharmacy is what pushed them over."

United also agreed to pay for an independent auditor who will verify if it is complying with the prompt pay laws. The auditor will submit quarterly reports on accuracy and completeness of United's reports. The auditor's first report is due June 30.

Under the order, not meeting the 98-percent standard for each quarter between January 2006 and June 2007 could lead to $3 million in fines for each quarter the company is in violation. Also, United faces a $1.5 million fine for each quarter in which it does not maintain proper complaint logs.

If TDI is not satisfied with United's compliance through 2007, it could extend the monitoring and potential fines for another two years, with the fines for recordkeeping violations escalating to $3 million per quarter.

"So the total amount if they mess everything up - which I'm hoping that they don't do - could be $27 million," Ms. Waitt said. "Frankly, I feel that if they're willing to bet that much on it, they must have their house in order."

United did not respond to requests for comments regarding the consent order and potential future fines.

This is the third time United has been fined for violations since the prompt payment law passed in 1999. The company previously was fined $1.25 million in September 2001 and another $240,500 in September 2004.

And TMA officials say United routinely ranks at or near the top of the list for physician complaints submitted to TMA's Hassle Factor Log. During 2005, TMA received 186 complaints regarding United, second only to 225 received against Aetna. Issues involved in those complaints included claim denial, delayed payments, coding issues, and medical records problems.

Dr. Strate says she is somewhat optimistic United will improve its claims processing under the consent order.

"I'm encouraged by it because this order does seem to mandate that there's going to be scrutiny, and it lays out how that will occur in quite a bit of detail," she said. "Not only that, but it also lays out an 'including but not limited to' clause that TDI can actually investigate possible violations that aren't mentioned at all in the order. The sum total of this order, I think, is very strong." 

Ongoing Complaints

Still, TMA has raised additional issues regarding United that TDI has yet to address. In a July 2005 letter to TDI, Dr. Strate complained about the company's "maximum frequency per day" policy that limits the number of procedures the company would pay for on any given day regardless of how many times that service is actually performed.

"This seems to be, at best, an attempt to circumvent the Texas prompt pay laws and the requirement to pay the physician 100 percent of the cost of the services while an audit is performed or, at worst, an attempt to pay less for services than required by the contract between United and the physician," Dr. Strate wrote.

Dr. Strate said the policy amounts to automatic claims downcoding similar to Humana's decision in 1999 to pay all level 4 and 5 services at a level 3 rate unless the physician appealed.

In that same letter, TMA complained United had modified several payment and claims policies retroactively and without 90 days notice, as required by law, and had refused to provide its bundling and downcoding policies to some requesting physicians.

TDI officials replied in August that Commissioner Geeslin had met with United executives to discuss TMA's concerns, but Dr. Strate says TMA has not received any indication TDI plans to address the issue. A TDI spokesperson says state lawyers are investigating the matter as a possible violation of utilization review and unfair claims-settlement practices.

In a second letter last December, Dr. Strate and Texas Society of Pathologists President Yvonne Hearn, MD, complained that United is no longer paying for the professional component of clinical pathology services.

They said the company is attempting to "use the Centers for Medicare & Medicaid Services (CMS) payment methodology where professional component fees are paid to the hospital in which the laboratory services are provided." But unlike CMS, they said, "UnitedHealthcare did not modify the Diagnosis Related Group weightings to ensure payment to the hospital covered the cost of inpatient care."

That issue also remained unresolved as of mid-January, but the TDI spokesperson says the agency will remind United it is required to give 60 days notice before changing claims-payment procedures and will request information about whether the payment changes a patient's coverage benefits.

Ken Ortoloncan be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email at Ken Ortolon.  

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