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‘A Drop in the Bucket’

California HMOs Slapped with $7 Million Fine

Thursday, December 2, 2010
By Nick Welsh (Contact)

Dr. Philip Delio, head of Santa Barbara’s Medical Society, dismissed the $5-million fine imposed on the seven largest HMOs in California as “a drop in the bucket.” The HMOs were fined for failing to make payments to thousands of doctors over the past three years in a full or timely manner. According to the California Department of Managed Health Care, the HMOs are required to pay no less than 95 percent of the costs for which they are billed. But an audit revealed the actual number was closer to 80 percent. Delio said he took solace in the fact of the fine, but found fault with the size. “Blue Cross got fined $900,000. They could find that amount of money underneath the cushions on their couch,” he said. “It’s like winning a class action lawsuit and everyone gets paid 45 cents.”

Beyond the fine, the seven HMOs will be required to make restitution for “tens of millions of dollars.” According to Delio, doctors’ offices submit their payment claims to the various HMOs, only to be reimbursed for less than the amount or not paid at all. This forces medical practitioners to spend an inordinate amount of time billing and re-billing the insurance carriers. “We have a limited staff, and when they’re on the phone with Blue Shield when they could be taking calls from patients, that’s a problem.” Delio said in some instances it gets so bad that certain doctors have refused to accept patients who are covered by certain health plans. The problem, he said, is that some people walk around thinking they have health insurance that medical professionals won’t accept because of the hassle factor.

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