California has levied nearly $5 million in fines against the seven largest health plans in the state for violations in paying claims to health care providers statewide. These fines, along with restitution to doctors and hospitals, cap an 18-month investigation of claims practices.

In addition to penalties, the state Department of Managed Health Care has ordered changes to health plans’ payment practices.

“Providers are struggling to stay afloat in a very difficult business environment,” said DMHC director Cindy Ehnes at a Los Angeles news conference Nov. 29. “Improper payment of provider claims runs the risk that our health care delivery system could grind to a halt. Our audits have found that some health plans may consider their mistakes a ‘cost of doing business,’ but public disclosure and penalties change that calculation.”

All seven plans were found to have violated the minimum legal threshold of paying 95 percent of their claims correctly. The audits found that not only did the plan not pay claims accurately, but the second-chance process of getting paid was also often flawed.

Five of seven plans were found to violate provider dispute resolution procedures, which is the method that providers must use to protest an underpayment or claims denial and get a corrected payment.

The health plans receiving fines are:

• Anthem Blue Cross for $900,000;
  
• Blue Shield of California for $900,000;
  
• United/PacifiCare for $800,000;
  
• HealthNet for $750,000;
  
• Kaiser Foundation Health Plan for $750,000;
  
• Cigna for $450,000; and
• Aetna for $300,000,