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CA Cites 3 Insurers Over Improper Speech, OT Denials

November 19, 2013

SACRAMENTO (November 19, 2013) -- The California Department of Managed Health Care (DMHC) has ordered three health insurers to stop denying claims filed for speech and occupational therapy for patients with developmental disabilities, including autism. The three insurers were ordered to reimburse the claims and one--Health Net--was also fined $300,000 for repeated violations.

“Medically necessary speech and occupational therapy are basic health care services that health plans must cover,” said DMHC Director Brent Barnhart [left]. “Today’s actions will ensure that members receive the care required by law.”

The orders were issued against Health Net, Anthem Blue Cross and Blue Shield of California for denying coverage of speech and occuaptional therapy claims without determining whether the services were medically necessary. Health Net was additionally fined $300,000 "for repeatedly and unlawfully mischaracterizing requests for services as coverage issues rather than medical necessity issues."

Under California's Knox-Keene Act, health plans are required to cover basic health care services whenever medically necessary. Consumers have a right to appeal denials with DMHC acting as final arbiter.

In the case of Health Net, the DMHC received 41 complaints regarding denials. The agency referred 36 of the disputed claims to the Independent Medical Review program which concluded that 35 were medically necessary and should have been reimbursed.

Health Net reversed itself on the other five denials and provided coverage, each of which involved patients with autism. The claims had been denied on the basis they were not caused by a "defined disease" or physical cause, they lacked a qualifying diagnosis or because the service was "educational" rather than medical.

"The fact that the Department's IMR process overturned (Health Net's) grievance resolution determination in an overwhelming number of these cases is indicative of the fact that (Health Net) failed to adequately consider its enrollees' grievances," the DMHC said in its complaint. "(Health Net's) conduct unnecessarily delayed the authorization for these services by an average of 88.07 days."