DMHC Fines CareMore Health $75,000

CareMore Health Plan, the Cerritos-based Medicare Advantage insurer, was fined $75,000 by the Department of Managed Health Care earlier this month for failing to keep enough cash on hand to cover potential financial shortfalls.

CareMore was never in any financial difficulties. The penalties relate to state-mandated minimum amounts health plans are required to keep on hand at all times in case they must patch over financial issues that may be related to its provider network and other entities that furnish services to a health plan's enrollees, as well as funds that are kept restricted at all times. A DMHC spokesperson said the issues were discovered during a routine review of financial data CareMore submitted to the agency.

In CareMore's case, the DMHC concluded that it failed to keep enough funds on hand to cover potential insolvencies that could occur among non-contracted providers. Given CareMore's size, the required deposits on hand run well into the eight figures.

According to the DMHC, CareMore was deficient during five quarters between March 2009 March 2012, with the deficits ranging from more than $500,000 into the millions of dollars. Its biggest deficiency, in March 2012, was when CareMore had $19.31 million on deposit, but was required to have $21.32 million on hand.

Some of those deficiencies occurred during a time when CareMore was owned by WellPoint, the Indianapolis-based insurance giant that acquired CareMore in 2011. A WellPoint spokesperson said corrective actions have been taken.

CareMore was also found to be deficient in four quarters between September 2009 and June 2010 regarding its restricted deposits – money that cannot move out of its accounts at any time. It was required to have $300,000 in such an account. In two quarters in 2009 and 2010, it had no restricted funds on deposit at all. In September 2009, it had less than $41,000 on hand, and in June 2010, it had about $268,000 on hand.

Along with the fine – which was levied in three instances of $25,000 apiece – CareMore officials also agreed to more precise accounting methods for how it estimates the ratio of claims from non-contracting providers to total claims.