State Stands Behind CDPHP Fine

The New York State Insurance Department is standing behind its decision to punish Capital District Physicians' Health Plan (CDPHP) and its subsidiary CDPHP-Universal Benefits, Inc. for failing to notify members of their right to appeal denied claims.

CDPHP contends only a small percentage of the nearly 122,000 cases documented by the state actually involved denials.

"CDPHP, like other plans, needs to comply with the consumer protection laws in New York," said Troy Oechsner, the State Insurance Department's Deputy Superintendent for Health. "Intent or no intent (of wrongdoing), they have to comply with the law."

By state law, health insurers are required to send explanations of benefits (EOB) to both patients and physicians. EOBs document which physician a patient visited, what services were performed, and how much it cost, among other things.

According to the Insurance Department's findings, CDPHP neglected to send EOBs to all of its members. That - Oechsner said - robbed them of knowledge of an important consumer protection: the right to appeal a denied claim.

"There may be a number of instances where consumers didn't know to appeal their denial," he said. "If they would have appealed it, ultimately an independent arbiter may have said, 'Yes. CDPHP -- you should have paid that claim.'"

John Demers, CDPHP's Vice President of Advertising and Public Affairs, admitted some EOBs were not sent to members, but he said it was an attempt to reduce paperwork -- not an attempt to keep members in the dark. Most of the EOBs in question had nothing to do with members anyway, he said.

"We didn't feel - at the time - that it was necessary for a member to get a document that said the claim was denied if it didn't have anything to do with the member," Demers said. "At the end of the day, it's the doctor or the provider and CDPHP that has to negotiate that."

Since CDPHP is an HMO, its members only pay up-front for out-of-network emergency care, Demers said. As a result, it is unlikely that any member had to pay out-of-pocket for a claim without having been notified of the reason or reasons for the denial, he said.

"We are looking into it to see if there's any minute instance where it possibly could have happened," Demers said, "but it's very unlikely."

As to the state's finding that CDPHP misled its members by claiming the Insurance Department had approved rate increases -- a power it does not have -- Demers said that, too, was a misunderstanding that has since been corrected.

The Insurance Department also found that CDPHP did not use a licensed claims adjuster to negotiate out-of-network claims, failed to resolve some claims in a timely manner, and made errors in adjudicating some claims. Demers responded that some things - inevitably and regrettably - slip through the cracks.

IMPORTANT TELEPHONE NUMBERS

CDPHP Member Services: 1-800-777-2273

NYS Insurance Department Consumer Hotline: 1-800-342-3736