Blue Cross Ordered to Stop Trying to Collect Old Overpayments

Anthem Blue Cross has gotten in trouble this week with California state regulators over trying to collect millions of dollars from medical providers for medical claims the company thinks were overpaid. As San Francisco insurance attorneys we understand that insurance companies are for-profit entities, but often the drive for profit leads the companies to push everyone else out of the way–including the interests of medical providers and policyholders.

California insurance law allows health insurance plans to seek reimbursement for overpaid medical claims within one year of the payment of the claim. If the insurance company wants to seek to collect on claims over a year old, it needs to demonstrate fraud or misrepresentation by the medical provider.

But according to news reports, earlier this year the California Department of Managed Health Care began investigating collection attempts by Anthem Blue Cross in the state. The Department is a government entity tasked with regulating managed health care plans in California and protecting the state’s 20 million health plan enrollees, as well as educating consumers about their health care rights. The investigation discovered that between 2008 and 2011, Anthem Blue Cross tried to collect overpayments from 535 providers for claims that were more than one year old and the company did not provide any evidence of fraud or misrepresentation, despite the California law requiring it. Anthem accuses the various medical providers of improperly coding the claims using upcoding, unbundling, or miscoding procedures. Anthem also tried to collect from another 13 providers who it claims billed for services never rendered.

The Department of Managed Health Care issued a cease-and-desist order this week against Anthem to stop these actions. The order, signed and dated on July 16, 2012, states that Anthem’s letters requesting reimbursement for overpayment failed to provide notice required by California Code of Regulations, Title 28, section 1300.71, subdivision (d)(3).

That section requires that the company provide, in a separate writing, notice of the name of the patient, date of service, and a clear explanation on the basis for the belief that the amount paid on the claim was excessive of the amount due, including interest and penalties on the claim. The order also states that Anthem “failed to assert or demonstrate basis sufficient to show fraud or misrepresentation on the part of the provider”. It therefore did not meet the requirements under the law to collect reimbursements past the first year after the claim was paid. Director Brent Barnhart said, “Health care providers should not face unexpected demands for reimbursement of medical claims they believe were appropriately paid years ago. Anthem’s recoupment practices violate California law and are unfair to providers who are acting in good faith.”

Anthem spokesman Darrel Ng responded by stating that these efforts to collect on overpayments is to keep health care costs down, and that the company believes providers should not get payment twice for the same procedure. He said the company is looking at the order and considering their options.