Three Units of Aetna Pay $850,000 Fine to New York on Incomplete Benefit Form Disclosures

Three Aetna Inc. companies have collectively paid an $850,000 fine to New York State insurance regulators to settle charges of incomplete disclosures on explanation of benefit forms and violations of the state's prompt-payment requirements.

In June, the New York State Insurance Department said a market-conduct examination of the subsidiaries -- Aetna Health Inc., Aetna Health Insurance Company of New York and Aetna Life Insurance Co. -- showed violations of state insurance laws and regulations, including utilization-review programs but the department hadn't yet determined a fine (BestWire, June 22, 2010).

The exam covered a review of how the companies fulfilled their contractual obligations to policyholders and claimants and covered the period of March 1, 2001, through Dec. 31, 2005.

Almost all of the findings have been corrected, said the Hartford, Conn.-based Aetna (NYSE: AET) in a statement. All of the utilization-review findings noted in the exam were corrected during 2007 and 2008, and all process errors related to EOBs have been corrected and EOBs issued by Aetna's claim systems "now have a more consistent look and feel," the company said.

Among the exam's findings were that Aetna Health didn't consistently submit EOB forms to its members as required and that Aetna Health Insurance Company of New York and Aetna Life violated various parts of New York insurance law by failing to properly enforce differing aspects of their utilization-review programs, such as internal and external appeal rights (BestWire, June 22, 2010).

In a statement, New York State Insurance Superintendent James Wrynn said he is "encouraged by the company's level of commitment in addressing the department's findings and working to improve its performance going forward."

Aetna agreed to revise its procedures about how it issues EOB forms and their content, its appeal requirements and the information provided to insureds and prospective insureds. An EOB form should tell consumers "how to appeal if they think they are being asked to pay an incorrect amount and how to appeal the insurer's decision not to provide coverage if it has been denied," Wrynn said.

Aetna also agreed to develop and submit a plan for improving compliance with New York's prompt-pay law.

The prompt-pay law, which took effect in 1998, requires health insurers and HMOs to pay undisputed insurance claims within 45 days of receiving them (BestWire, Aug. 25, 2010).

In August, the department fined 20 health insurers and health maintenance organizations, including Aetna, nearly $717,000 combined for not paying members' and providers' insurance claims promptly (BestWire, Aug. 25, 2010).

Aetna Health Inc. (a New York corp.), Aetna Health Insurance Company of New York and Aetna Life Insurance Co. each currently have Best's Financial Strength Rating of A (Excellent).

Shares of Aetna were trading at $30.60 the morning of Oct. 5, up 0.34% from the previous close.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])