Published: August 05, 2008 12:06 pm         

CDPHP fined $600,000 for violations

An Albany-based health insurer with coverage in this region has been fined $600,000 for numerous violations of state insurance regulations.

Capital District Physicians Health Plan, CDPHP, and CDPHP-Universal Benefits Inc., an affiliated health insurer, were penalized primarily because they failed to advise consumers how to appeal when their claims were denied, Insurance Superintendent Eric Dinallo said Tuesday.

CDPHP and UBI to contact all members who were denied claims in situations where the companies failed to provide Explanation of Benefits (EOB) notices, or provided inadequate EOB information, Dinallo said.

The companies have agreed to contact members who filed claims for health care services to make sure they received proper denial notices. The settlement includes 121,911 claims submitted between 2004 and 2006.

CDPHP and UBI cover more than 400,000 people in 29 New York counties in the central and eastern parts of the state.

An EOB spells out how a claim has been processed, what costs are covered by the insurer, what costs must be paid by the member, and specifically what steps a consumer can take to appeal the denial of a claim, Dinallo noted.

Karen Scharff, executive director of Citizen Action of New York, a statewide consumer group, said “the right to appeal the denial of claims is one of the most important protections that consumers have today, but it isn’t as meaningful if people are not told of their rights by the company.’’

CHPHP members who receive reissued EOBs will be able to appeal previously denied claims if they have not already done so. CDPHP will be responsible for paying interest to members if additional payments are made in connection with these claims.

The deficiencies in the EOBs were uncovered in an examination of the insurer’s practices covering a period from 2001 through the first quarter of 2006. The department said the deficiencies were specifically related to the insurer’s EOBs and notice of appeal rights and not with the company’s appeals process procedures.

The department has directed CDPHP to review its procedures and submit a plan for improving its compliance with EOB requirements. The plan must be submitted within 90 days.

The insurer was also found to have sent rate increase notices to consumers containing inaccurate information and falsely suggesting the department had approved the increases. Under law, health plans such as CDPHP are permitted to increase rates without approval, though the department has urged the Legislature to restore its ability to approve or disapprove such increases before they are put in place by health insurers.

Other violations by the insurer included failing to use a licensed claims adjuster to negotiate out-of-network provider claims, instances of failing to adjudicate claims in a timely manner and instances of claims adjudication errors.

Consumers can contact the department’s Consumer Services Bureau toll-free at (800) 342-3736.