News Release

PO 360
Trenton, NJ 08625-0360
Christine Grant
Commissioner
For Release:
March 31, 2000
For Further Information Contact:
DHSS - Marilyn Riley (609) 984-7160
DOBI - Bill Heine (609) 292-5064
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New Jersey Fines HMOs More Than $400,000

TRENTON - Two HMOs have been fined more than $400,000 by the New Jersey departments of Health and Senior Services, and Banking and Insurance for a range of violations, including failure to promptly pay claims from health care providers.

Oxford Health Plans of New Jersey was fined $275,500, and United Healthcare of New Jersey was fined $127,400. The fines were outlined in consent orders signed by the HMOs and the departments. The two departments share responsibility for HMO oversight.

Both Oxford and United have corrected deficiencies that led to the fines, and have worked cooperatively with both departments in these investigations.

According to the consent orders, Oxford Health Plans failed to promptly pay claims from doctors and hospitals for services provided at various times in 1999, 1998 and 1997. Health and Senior Services found the prompt-pay deficiencies while investigating complaints from health care providers received in 1998 and 1999.

Banking and Insurance found prompt-pay deficiencies and unfair claims settlement practices while conducting an examination of Oxford's market conduct for the period between January 1, 1997 and May 22, 1998. The examination revealed that Oxford's claim payment problems were precipitated in part by the significant growth in enrollment during 1996 and the implementation of a new computer system to process claims.

Regulations in effect in 1998 required HMOs to pay "clean claims" - those for which all paperwork is in order - within 60 days of receiving them. Before those regulations took effect, HMOs were subject to the Fair Trade Practices provisions which only require that payment be made promptly. Currently, HMOs must pay claims within 30 to 40 days, under new legislation that took effect in December 1999.

The $135,500 fine levied by the Department of Banking and Insurance was for the lack of prompt claims payment and the unfair settlement of claims.

Banking and Insurance found 14 separate deficiencies - six involving Oxford's failure to investigate claims before denying them, and eight for the improper denial of claims for various reasons, including instances where Oxford stated a service was not authorized when, in fact, it was.

Health and Senior Services fined Oxford for eight deficiencies found during a regular monitoring visit last fall, and during the external patient appeals process, as well as during the complaint investigation. Health and Senior Services fined Oxford $140,000, including $80,000 for the prompt-pay deficiency.

Oxford was also cited for failing to get final state approval in contracting with Heritage New Jersey Medical Group to handle medical and related management of Oxford's Medicare claims. The department had given only conditional approval in 1998 to allow Oxford to notify its Medicare providers of the planned change, according to the consent order.

Other deficiencies related to the appeals process for consumers and providers. These included failure to resolve internal appeals of Oxford's medical service decisions in the required amount of time, and failing to inform providers of their rights, such as the right to file an appeal on behalf of a member.

Oxford submitted and carried out a plan of correction, and Health and Senior Services found that all deficiencies have been remedied.

United Healthcare of New Jersey was fined $127,400 by Health and Senior Services for failing to remove from its provider network a physician whose license to practice medicine in New Jersey had been suspended by the State Board of Medical Examiners. The health department also cited United for not having a system in place to prevent such an incident.

A United Healthcare member reported to state officials last August that United continued to refer her to Dr. Abdolai Khajavi, even after she told the plan she had read a newspaper account of his license suspension.

During an inspection visit, the department determined that United knew by July 1, 1999, that the doctor's license had been suspended. But United failed to remove him from the network until August 20, 1999.

United Healthcare has submitted the required plan of correction. During an on-site visit last October, the department verified that United had put in place a quality improvement plan to prevent the problem from recurring.

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