Healthcare Fines and Penalties of the Week

And you wonder why the healthcare business rates so low in public esteem. Some stories from just the past week or so:

• UnitedHealth paid a $250,000 fine in Ohio for telling members in the state that they’d have to change doctors, apparently as a negotiating tactic with a state healthcare provider whose contract was about to lapse;
• Meanwhile, UnitedHealthcare subsidiaries were fined $800,000 in North Carolina for problems in handling insurance claims;
• Springfield, Mo.,  healthcare outfit CoxHealth agreed to pay $60 million to settle Justice Department allegations that it improperly billed dialysis services to Medicare and violated federal rules against physicians referring business to themselves;
• HealthMarkets agreed to pay $20 million to settle insurance-rule violations in 36 states, after it apparently failed to disclose the limitations of its individual health-insurance plans to policyholders;
• Health Net finalized a $215 million settlement over charges that the insurer paid unreasonably low out-of-network rates from 1995 to 1997;
• AmeriGroup, an Illinois insurer that refused to enroll “high-risk” patients in a Medicaid plan, paid $225 million to settle a state and federal lawsuit over more than 18,000 false Medicaid claims.

That all sound pretty bad, and while some of these cases may reflect honest mistakes, on the whole they reflect the prevailing ethos that encourages insurers and healthcare providers to game the system whenever possible,  even if it means getting caught and paying for it later. Because when it comes down to it, even the larger fines here aren’t a huge deterrent for most large healthcare organizations.

A few weeks ago, FierceHealthcare’s Anne Zieger made exactly that point following California’s high-profile assault on insurer “rescission,” the practice of cancelling insurance policies after a member gets sick and starts racking up big bills:

The thing is, just how much have these sanctions accomplished? Sure, some policyholders have gotten their coverage back, and the giants will be shelling out some cash, but just how effective a deterrent is this? After all, we’re talking multi-billion-dollar players here, so $1 million is an inconvenience and $10 million a rounding error for folks. Even more significantly, the plans aren’t being required to admit any wrongdoing, so legally, they would seem to be shielded from facing a flood of lawsuits related to their actions. (Attorneys, I’d be interested to hear your opinion on this.)

The bottom line here, I think, is that if officials want to stop health plans from making improper policy cancellations, they’re going to have to make it unprofitable for them to do this. While fines sound good, they’ll never be large enough to be more than a mosquito bite for healthplans with billions in revenue. So someone has to try a new approach. Perhaps laws changing what kind of underwriting criteria they could use would be in the ballpark?