This California HMO delayed paying $80.3M it owed hospitals and others, eliciting $1M fine
The state Department of Managed Health Care hit Molina Healthcare of California with a $1 million fine because it failed to make roughly $80.3 million in payments to hospitals and other providers in a timely manner, the agency announced Friday.
“It is important health plans promptly and accurately pay claims to hospitals, doctors and other providers when health care services are provided to enrollees to ensure the financial stability of providers, and the overall stability of the health care delivery system,” said Mary Watanabe, director of the department.
Molina already paid the fine and has paid providers what they were owed, plus interest of $1.8 million, department officials said. By the time Molina realized the problem and began working to resolve it, the affected providers had been waiting more than 45 working days to resolve 29,124 disputes initiated between September 2017 and September 2018.
“Molina’s systemic failures to timely resolve provider disputes caused payment delays, potentially jeopardizing the financial stability of providers,” Watanabe said.
The delays stemmed from an update to the company’s data management systems in the summer of 2017. Although the software updates were done to improve efficiency and modernize operations, Molina saw declines in both the time it took to acknowledge provider disputes and to resolve them.
Beginning in January 2018, Molina’s provider dispute resolution unit began looking into the delays and found several factors had affected response times:
- Previously, providers had been able to file disputes with two different teams, but the company had changed that to require that all complaints be routed through the provider dispute resolution unit.
- Along with this change, the company required providers to submit disputes individually.
- That change created inefficiencies because, even when providers submitted multiple claims in one dispute, they received responses on each individual claim. This created unnecessary work and, along with other paper shuffling, created an administrative logjam that slowed processing.
The DMHC said most of the complaints it received about delayed payments came from hospitals and skilled nursing facilities. Molina violated a state regulation requiring health plans to write within 45 working days to tell providers how they will handle a claims dispute and explaining the reasons for their actions.
This story was originally published June 18, 2022 at 5:00 AM.
