By Rayne Brown

On December 18, 2019, the Department of Managed Health Care (DMHC) announced an enforcement action against 12 health plans, imposing fines totaling $1.9 million for their failure to properly oversee a contracted medical group that was improperly denying and delaying enrollees’ health care.  Fines ranged from $2,500 on Cigna HealthCare of California, Inc. to $450,000 on Blue Cross of California Partnership Plan.  The Department determined the various fine amounts based on factors such as the plans’ enrollment assigned to the contractor in question, cooperation with DHMC, corrective steps taken, and the nature, scope, and gravity of the violations.

DMHC originally opened an investigation into the Employee Health Care Systems Group (EHS), a medical group contracting several health plans, following a whistleblower report in October 2017. EHS subcontracted with SynerMed to oversee the care of over 550,000 health plan enrollees and fulfill all of EHS’s contracted duties, such as handling health care services requests and managing payments to provider medical claims. SynerMed and EHS shared many of the same personnel and were effectively the same organization. In December 2017 the Department issued a cease and desist order to the 12 health plans, directing them to terminate their contract with EHS to prevent further harm to enrollees.

DMHC’s investigation revealed that EHS and SynerMed had been illegally denying enrollees access to care in order to make a profit by implementing a host of unlawful tactics, including restricting access to specialists who were deemed too expensive to be covered; discriminating against enrollees requesting high-cost treatments for special conditions by sending them to a team designed to pressure them to leave EHS, and in fact, diverting over 5,000 enrollees when then experienced delays in care; and systematically forging thousands of audit documents to make it appear as though it sent enrollees denial or modification notices, when in fact it had not.

DMHC reached individual settlement agreements with each of the 12 health plans, imposing the fines, and requiring the health plans to implement corrective action plans that include better oversight tactics, system integrity tests, and outreach to affected enrollees.  Under the terms of the agreements, the plans must also prevent any illegal use of economic profiling and ensure that employees of contracted entities have appropriate outlets to report internal fraud and abuse.  According to DMHC’s Director, Shelley Rouillard, “The health plans must improve their oversight to make sure their enrollees have proper access to care and their contractors follow the law.”

Patients who experience any difficulty accessing care, and are unable to receive help from their health plan, can contact the DMHC Help Center at www.HealthHelp.ca.gov or 1-888-466-2219.