DMHC Fines Anthem Blue Cross $1.5 Million

The Department of Managed Health Care has levied a $1.5 million fine against Anthem Blue Cross of California for failing to pay for prenatal tests a state agency performed for tens of thousands of its enrollees, records show.

Agency correspondence to Anthem indicated that for nearly three years -- from mid-January 2010 to the end of 2012 -- the health plan did not properly process claims for performing alpha feto protein, or AFP, testing. The blood test is used to determine whether a fetus may be afflicted with Down Syndrome or Trisomy 18, and it is conducted by the California Department of Public Health (CDPH) through what is known as the Expanded AFP Screening Program. Blood draws are performed during the first and second trimester and then compared to determine the status of the fetus. The testing may also be supplemented by an ultrasound.

Under an arrangement with most commercial health plans in California, the CDPH performs the testing -- it is the only provider in the state authorized to do so -- and the insurer is required to cover the cost, which is about $162, according to documentation about the program. That cost does not cover any ultrasounds that are to be performed.

But according to the DMHC correspondence with Anthem, the insurer did not cover the cost of the testing, which it is required to do under a state law that compels insurers to cover a specialty service if it is not available within their provider network. The DMHC began receiving complaints from enrollees almost immediately after the lapse of coverage began in early 2010.

In Anthem’s case, it apparently did not cover this cost for some 27,000 of its enrollees, who “experienced adverse consequences as a direct result” of being improperly billed for the test, according to the DMHC correspondence. The document did not provide any specifics, but suggested that Anthem enrollees were billed for the procedure at high out-of-network rates. In some instances, the CDPH also billed Anthem Blue Cross enrollees.

Anthem’s enrollees were improperly billed as much as $945,000 for the tests, according to DMHC spokesperson Rodger Butler. The adverse consequences were connected to them being billed, not to their health or the health of their children, he noted.

The fine is the largest levied against Anthem by the DMHC since 2009, when it fined the insurer $2.5 million to settle a variety of allegations that the agency claimed had disrupted continuity of care for Anthem enrollees. It is the third largest penalty ever levied by the DMHC against Anthem. In 2008, the agency fined the carrier $10 million for engaging in post-claims underwriting of its enrollees -- essentially retroactively revoking their insurance coverage after a large medical claim was made.

For the AFP issue, Anthem agreed to undertake a plan of correction that included ensuring “an enrollee's costs are limited to the copayments, deductibles, and co-insurance applicable to in-network providers under the terms of the enrollee's evidence of coverage,” according to DMHC correspondence.

Anthem Blue Cross officials declined to respond to specific questions. Darrel Ng, a health plan spokesperson, said in a prepared statement that "the practice in question was discontinued in late 2012, and the completion of the enforcement action concludes the issue."