Department of Managed Health Care Orders Aetna To Pay Fine for Improper Denial Of Reconstructive Surgery


By Alex Ruf

On February 25, 2021, the Department of Managed Healthcare’s (DMHC) Office of Enforcement signed a letter of agreement with Aetna Health of California, Inc. (Aetna) with respect to Aetna’s violations of Health and Safety Code sections 1367.63(a) and 1368(a)(1). DMHC informed Aetna in its letter that Aetna’s failure to provide coverage of reconstructive surgery and failure to maintain a grievance process made Aetna subject to discipline under Section 1386(b)(1) of the Health and Safety Code. DMHC fined Aetna $25,000 for the violations, and ordered it to submit a Corrective Action Plan.

According to the letter of agreement, DMHC found that Aetna violated Health and Safety Code Section 1367.63(a) when Aetna failed to cover electrolysis for an enrollee’s gender reassignment surgery, claiming that the electrolysis was “an excluded cosmetic procedure.” Section 1367.63(a) mandates that every health plan cover reconstructive surgery, defined as “surgery performed to correct or repair abnormal structures of the body caused by congenital defects, developmental abnormalities, trauma, infection, tumors, or disease, to do either of the following: improve function, or; create a normal appearance to the extent possible.” The enrollee’s surgeon informed Aetna that the enrollee had a diagnosis of gender dysphoria, met all of Aetna’s requirements for gender reassignment surgery and that the electrolysis was medically necessary as part of the gender reassignment surgery. Based on this information, DMHC stated in its letter that Aetna “failed to evaluate the clinical reasons for electrolysis being a medically necessary part of a genital reconstructive surgery,” violating Section 1367.63(a).

Health and Safety Code Section 1368(a)(1) mandates that Aetna “maintain a grievance system that provides reasonable procedures in accordance with department regulations that shall ensure adequate consideration of enrollee grievances and rectification when appropriate.” DMHC determined in its letter that Aetna’s failure to conduct a clinical review for medical necessity of the enrollee’s request for electrolysis as a medical procedure indicated that Aetna’s grievance system “failed to adequately consider the enrollee’s grievance and rectify the denial when it was appropriate to do so,” violating Section 1368(a)(1).

DMHC requested a Corrective Action Plan from Aetna based upon the violations. The Corrective Action Plan required, among other things, that Aetna provide written confirmation that it communicated the Gender Affirming Clinical Policy changes to its staff and medical directors, and written certification that Aetna provided training to its reviewing medical directors on the need to evaluate whether requests for cosmetic procedures are reconstructive and/or a medically necessary part of gender reassignment surgery. Aetna accepted the letter on December 18, 2020.


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