In what may be the first enforcement action taken by a state regulator against an “Obamacare” health plan for provider network problems, the Washington State Office of the Insurance Commissioner imposed a fine and suspended an insurer from accepting new members. The state acted at a time when many regulators, due to a lack of insurer participation in the Obamacare exchanges, may be reluctant to take actions that would remove options from the marketplace, and despite the state’s previous determination that the insurer in question had met network adequacy standards before it began selling plans to consumers.
Network Adequacy Complaints Prompt Investigation, Suspension
On December 12, Washington State Insurance Commissioner Mike Kreidler issued a cease and desist letter to Coordinated Care Corporation (a subsidiary of the Centene Corporation) for the immediate suspension of 2018 insurance plan sales. The directive came during the busiest week of Washington’s open enrollment period, which runs from November 1 through December 15, 2017, for plans beginning January 1, and through January 15, 2018, for plans beginning February 1, 2018. According to the Office of the Insurance Commissioner (OIC), it had received over 100 complaints on the insurer’s network adequacy since May, including complaints related to a lack of doctors, specialists (in immunology, dermatology, rheumatology and anesthesiology) and unexpected out-of-network medical bills.
The OIC had been working with Coordinated Care since May and previously instructed the insurer to correct its network. After its initial investigation, the OIC found that the insurer failed in its obligations to monitor its provider network, to report the network weaknesses to the Insurance Commissioner, to file an alternative plan to ensure that consumers received access to providers (known in the state as an AADR), and to complete timely renewal of its producer appointments. Coordinated Care submitted two disapproved AADRs to OIC on November 16 and December 6, and submitted a third AADR on December 12 that was denied. Centene then issued a letter to its brokers notifying them that Coordinated Care Corporation would stop accepting all coverage applications for 2018 plans on December 13.
Coordinated Care’s network weaknesses were prevalent throughout its largest service areas of King, Pierce, and Spokane counties; in some parts of the state, it is the only on-Exchange coverage option. Commissioner Kreidler and Coordinated Care agreed that it is in the public’s best interest to enter into a consent order terminating the December 12 cease and desist letter and allowing the insurer to resume selling plans, provided Coordinated Care acknowledges its duty to comply with existing laws and agrees to a potential fine of $1.5 million dollars. $500,000 of the fine must be paid by January 15, 2018 and the remaining $1 million will be suspended on the condition that the insurer commits no further network adequacy violations for the next two years and carries out the compliance plan laid out by the OIC. In its press release, the OIC stated that it will work with any member who has received a surprise medical bill.
More State Regulatory Oversight Coming?
The action taken by Commissioner Kreidler’s office is best viewed in the context of related moves. A recent PowerPoint deck from the component of the U.S. Department of Health and Human Services that oversees health insurance exchange plans in 39 states suggests that the majority of plans did not meet at least one provider network standard in 2016. Earlier this year, a Florida health plan agreed to a $15 million payment in order to settle a whistleblower allegation that it had exaggerated the size of its Medicare Advantage provider network in regulatory filings. Meanwhile, other state insurance departments — including Illinois, Nevada, Connecticut and Maryland — are implementing laws or regulations to tighten the state’s oversight of provider networks, and several state Medicaid offices are moving toward implementing new quantitative provider network standards. All of this suggests that 2018 could be a year of unprecedented provider network oversight from state regulators.