More Stiff Penalties From The DMHC
The Department of Managed Health Care has continued to levy significant fines against insurers for their operational and financial shortcomings, dinging two carriers earlier this month to the tune of $125,000.
Cerritos-based Honored Citizens Choice Health Plan, which operates as Citizens Choice Health Plan, was fined $65,000 for failing to meet guidelines for maintaining fiscal soundness. They included failure to maintain appropriate working capital at the end of last year and during the first quarter of 2014. At the end of 2013, the deficiency was $1.3 million, decreasing to $1 million as of last March 31. Citizens Choice was also penalized for falling $4.4 million short of tangible net equity requirements at the end of 2013 and $4.2 million short during the first quarter of 2014. It filed three reports during the first quarter of 2014 with the DMHC that misrepresented its financial position, the agency contended.
Citizens Choice, which has about 14,700 Medicare Advantage enrollees, was also penalized for not appropriately reporting a contract with an outside vendor to handle claims management, and for not promptly reporting the departure of four key personnel and their replacements between 2010 and 2012.
The California arm of ValueOptions, an Arkansas-based firm that typically provides behavioral health services on a carveout basis, was fined $60,000 by the agency last week for 15 different deficiencies. They included failure to provide appropriate medical, fiscal and administrative staff; failure to pay at least 95% of claims and any owed interest and penalties; failure to maintain a fidelity bond; failure to file a timely quarterly statement; engaging in an unfair pattern of payment to providers; and failing to notify the agency of a change in officers, among others.
The deficiencies were discovered as part of a routine survey of ValueOptions, which headquarters its California operations in Cypress. Several of the deficiencies were repeated from a survey undertaken by the DMHC in 2006. Enrollment figures for ValueOptions were not available.
The fine was the third against ValueOptions by the DMHC. Its last two penalties dated to 2003.
Citizens Choice had not been previously penalized or fined.
In addition to those two penalties, the DMHC also fined United Concordia Dental Plans of California $15,000 for failure to pay claims in a timely manner, and Seaside Health Plan, an HMO launched last year by the MemorialCare hospital system, $15,000 for failing to meet tangible net equity requirements.
