By Zoe Bulls
On August 28th, 2024, the California Department of Managed Healthcare (DMHC) countersigned a Letter of Agreement with California Physicians’ Service (Blue Shield of California) that notified the health plan provider of a $250,000 fine for billing 335 of its health plan members for contraceptive health care services in violation of California Health & Safety Code section 1367.25(b)(2)(A).
Under California Health & Safety Code section 1367.25(b)(2)(A), health plans licensed to operate in the state cannot charge enrollees a deductible, coinsurance, copayment, or any other form of cost-sharing for the purchase of or clinical and follow up services related to all FDA-approved contraceptive drugs, devices, and other products. This section was added to the California Health and Safety Code by SB 1053 (Mitchell) (Chapter 576, Statutes of 2014), also known as the Contraceptive Coverage Equity Act of 2014, which mandated that health plans in California must provide access to all Food and Drug Administration (FDA) approved contraceptive methods without cost-sharing, delays or denial of coverage.
In its letter to Blue Shield of California, DMHC outlined the process by which the health plans’ violations were discovered. In July 2018, a Blue Shield health plan enrollee contacted the DMHC Help Center after she unsuccessfully appealed a $3,439.61 charge from Blue Shield for an intrauterine device (IUD) removal. DMHC sent Blue Shield of California a “Request for Health Plan Information,” to which the health plan responded that it had properly billed the enrollee for the IUD removal. However, after the Department requested a detailed explanation of how the health plan’s charge complied with California Health and Safety Code 1367.25, Blue Shield of California said it had reassessed and agreed with the Department about the IUD removal and would reprocess and reimburse the claim.
The DMHC Help Center referred the issue to the Department’s Office of Enforcement, and the ensuing investigation prompted Blue Shield of California to conduct an internal audit that revealed it had illegally charged an additional 334 enrollees with a cost-share for contraceptive services. Blue Shield of California paid out $228,254 in reimbursements, interest, and penalty payments to the illegally billed health plan enrollees and fined an additional $250,000 by DMHC.
The Knox-Keene Health Care Service Plan Act of 1975 established DMHC and gave it regulatory authority over health plans operating in California. DMHC endeavors to protect consumers’ health care rights and foster a stable health care delivery system by regulating more than 95% of California’s commercial and public health plans. Consumers experiencing coverage denials or other issues with their health plan can seek support from the DMHC website.