Md. fines HMO for `downcoding' claims

By complying NYLCare can halve $100,000 fine

Managed care

May 29, 1999|By M. William Salganik | M. William Salganik,SUN STAFF

The Maryland Insurance Administration has fined an HMO $100,000 for arbitrarily "downcoding" claims submitted by a doctor -- that is, paying for a routine office visit when the doctor performed additional services.

Half of the fine will be suspended if NYLCare Health Plan of the Mid-Atlantic complies with insurance rules for the next year, said Insurance Commissioner Steven B. Larsen.

As part of the terms of the consent decree issued by Larsen and not challenged by NYLCare, the health maintenance organization has appointed a compliance officer to make sure it follows the rules. Over the past year, insurance regulators have also directed NYLCare to pay $250,000 in denied medical claims, fined the HMO $127,000 for a variety of problems including using unlicensed agents, and fined NYLCare $40,000 for denying patients 90-day supplies of maintenance drugs.

Larsen said NYLCare was the most penalized HMO "in both quantity and magnitude" since he became commissioner a year ago.

"In terms of being arbitrary, NYLCare seems to have won that race," Larsen said.

However, he added, NYLCare's parent company, Aetna U.S. Healthcare, now seemed to be making a good-faith effort to bring the HMO into compliance with the state's rules.

Aetna acquired NYLCare last year from New York Life for $1.05 billion. NYLCare has about 600,000 members in Maryland, Virginia and the District of Columbia.

Karen Lange, general manager for Aetna U.S. Healthcare for Maryland, said in a statement:

"Aetna U.S. Healthcare is committed to complying with all insurance regulations in the state of Maryland, as we are in each of the 30 states in which we operate HMOs. We continually seek opportunities to improve the level of service we provide to our customers and providers."

Officials of NYLCare could not be reached to elaborate on the statement.

Larsen said yesterday that his department first became involved when a physician complained that NYLCare had been "downcoding" his claims.

When the insurance administration asked the HMO for an explanation, NYLCare paid at the higher levels. It explained that it would pay for more than routine service only if the doctor submitted documentation.

Then, Larsen said, it happened again. The same doctor submitted 45 "downcoded" claims, and said he had supplied documentation in each case and could not believe a medical review would find him providing unneeded services in all 45 cases.

NYLCare sent state insurance investigators "a relatively frank letter saying, in effect, `We didn't look at the stuff he [the doctor] sent us,' " Larsen recounted. "I said, `You can't do that. You set up rules for the doctor, and he followed them.' "

Most of the claims in dispute were small, the commissioner said -- such as NYLCare paying $20 for a service for which the doctor had billed for $50.

He said the department had received a number of "anecdotal" complaints from doctors about disputes over level of service and payment, but it was rare to have a case that was so fully documented and in which the insurer basically admitted it had not reviewed the medical information provided by the doctor.

Pub Date: 5/29/99

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