DHMC Fines Care1st For Outsourcing
The Department of Managed Health Care has levied a $120,000 fine against Medi-Cal managed care insurer Care1st Health Plan for sending a large portion of its claims for processing overseas without notifying the agency, and providing inaccurate information about the change.
Care1st has about 410,000 enrollees in California, mostly through the Medi-Cal and Healthy Families programs. It also enrolls dual-eligibles who quality for both Medi-Cal and Medicare.
According to DMHC records, the agency had discovered during a routine audit that Care1st had apparently outsourced much of it claims processing. Such a change is considered a material modification of its operations. It is considered subject to disclosure under the California Health and Safety Code and requires DMHC approval.
When the Monterey Park-based Care1st officially reported the change at DMHC's request, it claimed that the processing was being handled by JMS, a Michigan-based claims processing firm with an affiliate, JMS Pacific, that operates in Montclair.
“It was determined that...the entity in which the plan was contracting was a Chinese business that had no direct ties to JMS Pacific,” the DMHC said in correspondence sent earlier this month to Care1st Chief Executive Officer Anna Tran.
The name or locale of the Chinese firm was not mentioned in the DMHC's enforcement action report. Neither DMHC or Care1st officials responded to either phone calls or e-mails seeking comment. An executive at JMS did not return a phone call seeking comment.
It is unknown whether other health plans in California are using overseas entity to process its claims. Nicole Evans, spokesperson for the California Association of Health Plans, said she had no information on that topic.
Privacy experts have expressed concerns about having overseas entities processing data involving U.S. patients because of concerns they cannot be legally bound to follow the privacy regulations contained in HIPAA.
The fine is the first six-figure penalty levied by the DMHC since December 2011. It penalized Care1st $50,000 last year for failing to resolve claims in a timely manner and paying incorrect amounts on late claims. claimsclaimsrecords show.
