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DMHC audit finds Anthem, Blue Shield Covered California directories violate state law

November 20, 2014
Area(s) of Interest: Fraud & Abuse Licensing & Regulatory Issues 


The California Department of Managed Health Care (DMHC) released the results of a five-month investigation of the Anthem Blue Cross and Blue Shield Covered California networks, which found that more than 25 percent of physicians listed as participating in the plans’ directories were not taking these patients or they were no longer at the location listed by the companies.

The audit also found that in both cases, auditors were unable to confirm Covered California participation status for more than 40 percent of physicians listed as participating in the plans’ directories after three separate attempts to contact them using information in the directory. This hindrance to accessibility for such a substantial portion of listed physicians is a violation of state law, the DMHC said in its report.

According to the DMHC audit, only 58.7 percent of the physicians listed in Anthem's Covered California directory could be verified as accepting Covered California patients, which is consistent with previous California Medical Association surveys of physicians listed as participating in Covered California. DMHC found that 12.8 percent of physicians listed by Anthem were not accepting Covered California patients; and 12.5 percent were not in practice at the location listed in Anthem’s directory.

In the case of Blue Shield, only 56.7 percent of the physicians listed in Blue Shield's Covered California directory could be verified as accepting Covered California patients, which is again consistent with our previous in-house verification efforts and analyses. The audit also found that 8.8 percent of the physicians listed by Blue Shield were not accepting exchange patients; and another 18.2 percent were not at the listed directory locations. By its own admission, Blue Shield attributed almost 40 percent of its inaccuracies to physician terminations of the plan contract or a group affiliation, 35 percent to uncorrected phone and address changes, and roughly 7 percent to physicians who no longer practice “because they were deceased, had moved, or had relocated out-of-state.”

The two insurers account for almost 60 percent of patient enrollment in Covered California. Both insurers are also utilizing networks for their exchange/mirror products that are significantly narrower than their regular PPO networks. These narrowed networks, combined with inaccurate provider directories, have led to significant confusion and frustration for both physicians and patients.

The audit, conducted by an outside group, focused on patient experience and avoiding potential harm to consumers based on network availability (e.g., assessing whether a patient could get needed care using the directory, as opposed to whether the plan indeed had a valid contract on file for the physician). 

In the report DMHC said the incorrect physician listings are problematic for consumers: “The disconnect between the information provided to members and the actual status of providers within the plans’ network has (the) real potential (to) create barriers to care.”

Both plans raised legal arguments as to why their networks do not violate the Health & Safety sections cited in the report and challenged the statistical methodology used by the survey vendor. DMHC dismissed these arguments as having no merit.

DMHC has turned the matter over to the Office of Enforcement for additional corrective action and other remedies as needed. The department has not said if the plans will be fined, though it plans to conduct a follow up survey of in-network provider listings in six months.

CMA will continue to monitor the situation closely, as it may have an impact on other actions underway in California. Such actions include the impending review of Medi-Cal managed care plan networks and directories ordered by the Joint Legislative Audit Committee, as well as the eight class action lawsuits currently pending in California courts over narrowed networks and inaccurate directories. The audits may also prove to be a popular topic in the next legislative session.

To read the results of the survey, click here for Anthem Blue Cross and here for Blue Shield of California.

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