UnitedHealth faces $67,500 in R.I. fines

UNITEDHEALTHCARE of New England CEO Stephen J. Farrell agreed not to appeal the charges, as part of a settlement that reduced the fine from the original $75,000, said company spokeswoman Debora M. Spano.  'This is still a new law, and we're still trying to work our way through it,' she added. /
UNITEDHEALTHCARE of New England CEO Stephen J. Farrell agreed not to appeal the charges, as part of a settlement that reduced the fine from the original $75,000, said company spokeswoman Debora M. Spano. 'This is still a new law, and we're still trying to work our way through it,' she added. /

PROVIDENCE – A “market conduct” examination of UnitedHealthcare of New England has found the company failed to comply with Rhode Island’s small-group health insurance law in several ways, primarily involving documentation, but also by applying surcharges to groups with sicker members.

The violations, made public yesterday by R.I. Health Insurance Commissioner Christopher F. Koller, cost United $67,500 in fines, including a 10-percent discount for prompt payment. In addition, the company will have to undergo a follow-up review within six months.

Koller’s office also released a market conduct report for Blue Cross & Blue Shield of Rhode Island, which showed small “technical deficiencies,” as described in a news release, but overall compliance with the Small Employer Health Insurance Availability Act of 2000.

In an interview, Koller said that in general, both companies had substantially improved their compliance with the law since 2003, when they were last examined.

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And even in United’s case, he acknowledged, there was no evidence that specific employers had been harmed – though the documentation deficiencies were substantial enough that the review could not determine whether United’s rate-setting system complied with the law.

The probe did find that United was violating one specific provision, which allows rates to be raised or decreased by up to 10 percent based on the group members’ health status. United was discounting rates by up to 3 percent for its healthiest groups, Koller said, and increasing rates by up to 17 percent for sicker groups.

The insurer was not fined for that particular violation, however, because it has corrected the problem going forward, Koller said.

Asked for comment on the report, which United CEO Stephen J. Farrell agreed not to appeal as part of a settlement that reduced the fine from the original $75,000, spokeswoman Debora M. Spano said United had never intentionally violated the law.

“A lot of what is cited are really technical issues that make it difficult – our interpretation versus their interpretation,” she said. “This is still a new law, and we’re still trying to work our way through it. … It’s just not black and white, ‘Here’s the line that you walk.’ ”

Spano said none of the violations had any financial effects on members, and there are “no consumer concerns as a result of this – it’s reporting.”

(The report did find several “consumer issues,” including inadequate access to information for small-group members and a possible failure to “fully and adequately” deal with complaints, but no fine was imposed for them.)

Spano said United is working to correct all the deficiencies, and it plans to have everything done by April 30. “We paid our fine, we paid it early, and we intend to comply with the law and move forward,” she said.

Blue Cross spokeswoman Kim Keough, for her part, said her company is “very pleased with the conclusion that we’ve been substantially compliant” with the law. She added that Blue Cross has submitted a plan to address the “minor, minor” technical issues found.

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