N.Y. CDPHP Units Hit With $600,000 Fine

Capital District Physicians Health Plan (CDPHP), an Albany-based health maintenance organization (HMO), and CDPHP - Universal Benefits Inc., an affiliated health insurer, have been fined $600,000 because they reportedly failed to advise consumers how to appeal when their claims were denied, Insurance Superintendent Eric Dinallo announced.

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.

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 to the Department within 90 days.

The insurer was also reportedly found to have sent rate increase notices to consumers containing inaccurate information as to rate increases and falsely suggesting that the Department had approved the increases. Under current law, health plans like CDPHP are permitted to increase rates without the prior approval of the Insurance Department. 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.