California looks into HMO medical claim denials; Kaiser Permanente and Anthem Blue Cross each rejected about 28 percent of their claims.

Kaiser Permanente and Anthem Blue Cross each rejected about 28 percent of their claims.

California looks into HMO medical claim denials
Victoria Colliver,
San Francisco Chronicle Staff Writer
September 4, 2009

The state attorney general has launched an investigation into how health maintenance organizations review and pay medical claims, the office announced Thursday.

The inquiry is based on an analysis by the California Nurses Association that found more than 1 in 5 requests for medical claims - 22 percent - were rejected by the state's six largest health insurers.

"These high denial rates suggest a system that is dysfunctional, and the public is entitled to know whether wrongful business practices are involved," said Attorney General Jerry Brown in a press statement.

The nurses union based its research on data reported to the state Department of Managed Health Care, which oversees HMOs.

In the first six months of this year, the group found denial rates ranged from 6.4 percent for Aetna to 39.6 percent for PacifiCare. According to the analysis, Cigna rejected 32.7 percent of medical claims, Health Net denied 30 percent of the time and Kaiser Permanente and Anthem Blue Cross each rejected about 28 percent of their claims.

The trade group representing the state's health insurers said the nurses' numbers fail to reflect the reasons behind the denials, which may include requests for more information, paperwork errors and duplicate claims, as well as claims submitted to the wrong health insurer.

"It appears that a good deal of the so-called denials are merely paperwork issues between providers and plans and have little financial impact on consumers or impact the care received," said Nicole Kasabian Evans, spokeswoman for the California Association of Health Plans.