DMHC Fines Blue Shield $140,000

The Department of Managed Health Care has levied a total of $140,000 in fines against Blue Shield of California for mishandling enrollee grievances.

The fines were related to numerous incidents that occurred between 2011 and 2013. The largest fine, for $100,000, was related to a 2012 incident in which the San Francisco-based health plan denied coverage for a continuous positive airway pressure (CPAP) machine for an enrollee. Under Blue Shield's medical necessity policy, the cost of the machine is covered for three months and the enrollee is required to demonstrate certain therapeutic benefits in order for coverage to be extended.

Although the enrollee provided documentation that should have supported continued coverage for the CPAP device and complained to regulators for being billed, Blue Shield claimed that it was excluded as a covered benefit and not subject to an independent medical review. The DMHC concluded that Blue Shield mischarcterized the issue in order to avoid such a review, denying the enrollee their rights, and that it failed to notify its provider of its decision in a timely fashion.

Blue Shield was also fined $25,000 for five other 2011 and 2012 incidents where it denied coverage due to lack of medical necessity, but without providing the specifics of its decision to the enrollees. It was fined $15,000 for a 2013 incident when it failed to quickly refund the premium of an enrollee who had switched to Medi-Cal. The DMHC concluded that Blue Shield's correspondence with the enrollee lacked specific dates and did not respond to the DMHC's inquiry on the matter in a timely fashion.