Anthem Blue Cross gets flagged and fined more than other insurers

One of California's largest health insurance plans has distinguished itself, and not in a good way.

The state Department of Managed Health Care hit Anthem Blue Cross with $9.6 million in fines from January 2014 through early November 2019, according to a California Healthline analysis of agency data. That is about 44% of the $21.7 million in penalties the department issued against full-service health plans during that period.

And yet, Anthem covered only 10% to 13% of Californians with department-regulated plans. An annual average of 3.8 million Californians were enrolled in the plan over the period analyzed.

By comparison, Kaiser Permanente covered nearly one-third of Californians in department-regulated plans in that time frame, but received 11% of the penalties. (Kaiser Health News, which produces California Healthline, is not affiliated with Kaiser Permanente.)

"One reason Blue Cross has more actions is due to the plan's historical failures to properly identify and handle enrollee grievances and appeals," department spokeswoman Rachel Arrezola said via email.

Anthem said it takes all enrollee grievances seriously.

"Anthem has been making significant changes in its grievance and appeals process, as well as investments in system improvements to help ensure we are simplifying the healthcare experience for consumers," said spokesman Michael Bowman via email.

The fines against Anthem are related to many of the 553 enforcement actions that the department has taken against the health plan for violations such as taking too long to respond to enrollee grievances, inappropriately denying claims and not covering the cost of out-of-network care that should have been covered.

The sanctions against Anthem make up more than one-third of the 1,432 enforcement actions the department issued. They can include settlement agreements requiring plans to change bad practices, cease-and-desist orders, judicial rulings and civil complaints.

"The primary purpose of an enforcement action is to change the health plan's behavior to comply with the law," Arrezola said.

The dates of the enforcement actions don't always coincide with when the violations occurred. The department can take years to process some enforcement actions and also processes some in batches, making year-over-year comparisons misleading.

In 2017, the department issued a $5 million fine to Anthem for repeatedly failing to resolve consumer grievances in a timely manner. But after lengthy negotiations, the department and the health plan settled in June on a $2.8 million fine along with an agreement that Anthem would invest $8.4 million to make improvements.

The Department of Managed Health Care, which oversees health plans that cover about 26 million Californians, is the state's largest health insurance regulator. Since 2000, when the agency was created, it has levied $73 million in fines to licensed health plans.

Anthony Wright, executive director of the advocacy group Health Access California, said fines are an important way to protect consumers, but he has advocated for even larger penalties.

"We don't want these transgressions to be the cost of doing business when [insurers] have not met the standards and consumer protections that we expect of them," he said.

Wright said it's important for consumers to check health plan enforcement records before they enroll, which can be accessed through the department's website.

But Wright acknowledged that many people don't have a choice, making the department's oversight role even more important.

"The most important thing is the fines and the corrective actions," Wright said, "to make sure these practices end."

This KHN story first published on California Healthline, a service of the California Health Care Foundation.