North Carolina regulators fine UnitedHealthcare $3.4 million for violations

North Carolina Insurance Commissioner Mike Causey today fined UnitedHealthcare of North Carolina Inc. and its affiliate UnitedHealthcare Insurance Co. $3.4 million following over four years investigating the companies’ claims handling practices involving balance billing.

In addition to the fine, UnitedHealthcare agreed to provide the Department of Insurance with a corrective action plan to address violations uncovered in the investigation and submit to future compliance examinations, the NC insurance department said in a news release.

The investigation targeted UnitedHealthcare’s handling of member grievances and claims processes involving non-contracted or out-of-network providers and facilities for anesthesia services and emergency room services to see if it was following its procedures to protect members from balance billing and complying with North Carolina law.

Balance billing occurs when an out-of-network provider charges more than the insurer allows for an in-network service and tries to collect the excess cost from the member. The investigation found instances where UnitedHealthcare did not follow its own procedures to negotiate with providers to hold the member harmless.

“Patients receiving emergency room services certainly don’t have the time or capacity to go through a checklist and make sure all providers attending them are in-network,” Commissioner Causey said. “UnitedHealthcare’s practices potentially put unnecessary financial burdens on many North Carolinians. I am happy to see that UnitedHealthcare has agreed to take corrective action.”

While UnitedHealthcare accepted the final report and voluntary settlement agreement, it did not admit to the findings contained in the report. It expressly denied violating any statutes, rules or regulations.

The $3.4 million fine will be distributed for the benefit of the public schools as required under Article IX, Section 7 of the North Carolina Constitution.

The Market Regulation Division began its investigation after the Department’s Consumer Services Division saw a sustained trend in complaints from UnitedHealthcare’s members and their providers. A review of the complaints showed that members were being subjected to cost sharing more than applicable deductible, copayment and coinsurance liabilities.

These medically necessary services were mainly provided by out-of-network anesthesiologists, laboratory services and emergency room departments. The anesthesia and laboratory services were often performed in conjunction with procedures and services provided at in-network facilities where a member received services from an out-of-network provider.

The companies’ failure to have in-network anesthesiology and laboratory providers available at in-network facilities should not affect the member’s benefit level or cost-sharing responsibilities for covered services, the report says.

North Carolina General Statute 58-3-200(d) says, “No insurer shall penalize an insured or subject an insured to the out-of-network benefit levels… unless contracting health care providers able to meet health needs of the insured are reasonably available to the insured without unreasonable delay.”

State law also prohibits insurers from imposing cost sharing for emergency services that differs from the cost sharing that would have been imposed if the provider had been in-network if a prudent layperson acting reasonably would have believed that a delay would have worsened the emergency, or the choice of a provider was beyond the control of the covered person.

The report also found that in a number of cases, when members filed grievances, UnitedHealthcare upheld its decision without any indication that efforts were made to intervene on behalf of the member to prevent them from being subjected to the difference between the amount billed and the companies’ allowed amount.

UnitedHealthcare would at times respond with an adverse decision letter saying, “You are responsible for all costs related to this service,” or “You may be responsible for paying the difference between what the facility or provider billed and what was paid.”