DMHC Takes Action Against Costco
The California Department of Managed Health Care has levied a $5,000 fine and an administrative penalty against Costco for improperly offering incentives for individuals and companies to stay enrolled in health plans offered through the big box retailer.
The fine and penalty appears to be a first for the agency. The DMHC typically issues them against carriers, medical groups and brokers, not national retailers with little connection to the insurance or healthcare fields. Costco Wholesale Corp., which is based in Washington State, operates 120 warehouse stores statewide.
According to correspondence sent last month by the DMHC to Costco, the regulator had determined that a promotion offered by the retailer late last year had violated the California Code of Regulations. The promotion offered was to individual and corporate members that included a cash card if they remained enrolled in a health plan offered through an affiliated broker of the retail for a minimum of 90 days. The Knox-Keene act contains a provision that forbids offering inducements for health plan enrollment.
DMHC spokesperson Rodger Butler said the promotion was limited to a single retail location in Central California. The gift cards being offered ranged in value from $75 to $500, depending on whether it was being offered to an individual or a group enrollee. Butler could not say how many gift cards were given out.
A Costco spokesperson did not respond to a written and a telephonic request seeking comment.
In another incident, the DMHC issued a $20,000 fine and an administrative penalty against Monterey Park-based Care 1st Health Plan. The agency had determined that the Accountable Care IPA, which Care 1st had hired to perform claims processing and utilization management, had failed to acknowledge and process claims in a timely manner. An audit had determined that 64 of 800 claims were not acknowledged in a timely manner, and 103 claims out of the 800 were not processed within 45 days. Another 41 out of 400 claims audited did not include proper interest and penalties when they finally were paid.
