Current Events Health Insurance Managed Care

PacifiCare fined $3.5 million for claims-processing violations

According to the San Diego Union Tribune, yesterday PacifiCare was fined $3.5 million and the California Department of Managed Health Care is seeking up to $1.3 billion in additional penalties for “130,000 alleged claims-processing violations…in California between July 1, 2005, and May 31, 2007.” PacifiCare is the second largest HMO in San Diego and the fourth largest health insurer in California.

These violations have prompted California Insurance Commissioner Steve Poizner begin an audit of the eight largest California health insurers to determine whether or not these companies have engaged in similar billing practice.

Joe Paduda of Managed Care Matters argues that the ruling is another piece of evidence which favors a  single-payer system.  Mr. Paduda states:

For those (including me) forever excoriating health systems and hospitals for their outrageous error rates, the debacle at Pacificare, the recently-acquired division of United Healthcare (one of my past employers) make the delivery sector look like a paragon of performance. I’m not overly surprised, as mergers involve systems conversions, the amalgamation of provider networks and contracts, and the shifting of work around to different call centers and processing locations. Duplicate staff positions are identified and people laid off, and when they walk out the door so does the expertise and understanding that enabled the operation to run smoothly.

The question remains, would a single-payer system perform better?  The government is not known as the paragon of efficiency.  With a single payer system, likely one of two things will happen:

  • Government administrators will make claims processing errors just as health insurance administrators do now, or
  • government administrators will deny less claims erroneously, but this will likely coincide with the acceptance of more unnecessary or false claims, thus increasing overall health care costs.

A single payer system may lead to improved claims processing.  However, for anyone to be convinced that a single payer system is the way to go, one must not only show that the present system is flawed, but that a single payer system is a significant improvement.