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State Regulations Slap HMOs With $5 Million In Fines

— State regulators have fined seven of California's largest HMOs for frequently underpaying doctors and hospitals. The fines total nearly $5 million. They're the largest penalties ever imposed in California for improperly paying claims.

The Department of Managed Health Care issued the fines after an 18-month investigation. The agency found the HMOs all violated the minimum threshold of paying 95 percent of their claims correctly. In fact, the average error rate was 20 percent. Many of the claims were late, underpaid, or both.

DMHC Director Cindy Ehnes said these practices have to stop.

"The improper payment of provider claims runs the risk that the health care delivery system in the state of California can grind to a halt," Ehnes stressed.

The seven companies that were fined are: Anthem Blue Cross, HealthNet, Kaiser Foundation Health Plan, Aetna, Blue Shield, PacifiCare, and Cigna. All of the HMOs must pay the penalties and make restitution to affected doctors and hospitals. They must also come up with plans for corrective action.

Ehnes said the insurers are subject to future audits to ensure compliance.

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