The Maryland Insurance Administration said yesterday that it levied fines totaling $1.7 million against 11 of the state's major health plans and one private review agent for late claims payments and other violations of state regulations.
The companies agreed not to contest the insurance administration's charges and have agreed to correct the violations, said Steven B. Larsen, the state's insurance commissioner.
Also, several of the health plans agreed to contribute money to a state education fund to alert health care consumers about their rights and responsibilities.
The fines were the result of a six-month review sparked by complaints from doctors, Larsen said.
"We do not think that any HMO members received a lesser quality of care because of these violations," he said.
Larsen said his agency wanted to levy "significant fines" to get the attention of management, as well as to get written agreements by the health maintenance organizations to correct their practices.
The largest fines were levied against HMOs that failed to pay claims within 30 days and did not pay interest on those late claims -- as required by Maryland law.
HMOs charged with late payments included Aetna U.S. Healthcare, United Healthcare of the MidAtlantic and Free State Health Plan Inc.
United Healthcare was fined $400,000 and will not contribute to the education fund. Aetna was fined $225,000, and the company agreed to contribute $175,000 to the fund.
Free State, which is owned by CareFirst BlueCross BlueShield, was fined $150,000 and agreed to contribute $25,000 to the education fund.
While the fines were large for the insurance administration, they are small compared with the profits of the health plans' parent companies. United Healthcare Corp. earned $568 million last year, Aetna Inc. earned $1.4 billion (including life insurance and financial services and health plan operations) and CareFirst earned $68.9 million.
Failure to receive timely payment for care has been an issue for the Maryland Hospital Association, said Nancy Fiedler, a spokeswoman.
"On average, it takes hospitals 80 days to be paid money due them," she said.
Kaiser Permanente was fined $225,000, primarily for using unapproved rates and contracts. The HMO agreed to contribute $175,000 to the education fund.
Delmarva Health Plan Inc. and CapitalCare Inc., also owned by CareFirst, were fined $50,000 for not supplying updated provider directories, as were PHN-PHO Inc., Prudential Health Care Plan Inc., CIGNA Healthcare Mid-Atlantic Inc. and Coventry Health Care of Delaware Inc.
Optimum Choice Inc. was fined $25,000 for the same violation.
Magellan Health Services Inc., a private review agent, was fined $300,000 for using improper provider contracts and violating licensing regulations.