State fines Aetna HMO $850,000

$600,000 penalty for late payments largest ever in Md.

Company put `on notice'

In all, five insurers must pay $1.4 million

September 06, 2001|By M. William Salganik | M. William Salganik,SUN STAFF

State Insurance Commissioner Steven B. Larsen announced yesterday the largest single penalty ever imposed on a Maryland HMO - $600,000 against Aetna U.S. Healthcare for late payments and related problems involving physical therapists.

In a separate action, Aetna was fined another $250,000 for paying podiatrists at incorrect rates for several years.

In all, Larsen announced $1.4 million in penalties against five health insurers. He said the penalties resulted from investigations of complaints from health providers and from follow-up reviews after a similar batch of fines last year. At that time, he imposed $1.6 million in penalties on 11 insurers.

If problems persist, Larsen said, "We have put Aetna U.S. Healthcare on notice that our next action will be substantially more severe. If we go back a third time, it's likely we will suspend their certificate of authority." That would mean Aetna would be banned from enrolling new Maryland members for a period of time. Aetna has about 250,000 members in Maryland, according to the insurance administration.

"Aetna takes these findings very seriously, and we're committed to following Maryland's insurance laws and regulations," said Walter Cherniak, public relations manager for Aetna's mid-Atlantic region.

He said Aetna had corrected the podiatry errors and canceled its contract with American Physical Therapy Network (APTNet) of El Segundo, Calif., its subcontractor for physical therapy, based on its own audit of APTNet's performance.

Larsen said APTNet failed to pay more than 90 percent of physical therapists' claims within the 30 days required by state law, "a late payment rate which is the highest we have ever found." He also said that APTNet had also failed to pay required interest on the late claims. APTNet officials did not respond to a telephone message seeking comment.

In addition to the fines, Aetna and the other insurers must pay back claims and interests to the doctors, hospitals and others who delivered care to their members. The insurance administration did not have the amount of back claims and interest owed by Aetna, and Cherniak said the figure was "proprietary."

The quality of care was not at issue in any of Larsen's actions; all were based on late payments and other administrative problems. Larsen said patients should not have been aware of the payment disputes, which were between the insurers and providers. The fines go into the state's general fund.

In addition to the Aetna actions, Larsen ordered:

A $300,000 penalty against United Health Care of the Mid-Atlantic. United was late in paying 30 percent of hospital claims and 38 percent of physician claims, and failed to pay interest, Larsen said. United will also pay $202,000 in interest to the doctors and hospitals.

Reinstated a $150,000 fine against Magellan Behavioral Health of Columbia, a mental health insurer, that had been suspended as part of last year's actions. Larsen said Magellan had reported itself for failing to keep up to date on claims, and had taken action to correct the situation.

Imposed $100,000 in fines against two dental insurers: $75,000 against Dental Benefit Providers of Maryland for not paying interest on late claims and $25,000 on CIGNA Dental Health of Maryland for failing to have its forms approved by regulators and other administrative problems.

Mark Santangelo, president of Magellan's Maryland regional service center, said his company's problem arose in part from a series of acquisitions that left Magellan with 10 different computer systems for claims. At the time of the state's examination, he said, the service center had 45 days of claims awaiting processing. With customer service phone representatives and other staff helping out on nights and weekends, he said, that had been cut to five days. "We're going to do everything in our power to be compliant," he said.

T. Michael Preston, executive director of the Medical and Chirurgical Society of Maryland, the state medical association, also praised the enforcement efforts. He said problems have been greatest in companies such as Aetna and Magellan that have tried to merge several systems.

"They're not just playing the float, which a lot of doctors think," Preston said. "They're just wildly inefficient."

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