Anthem Forced by Regulators to Issue Nearly $63 Million in Rebates to Customers

California Insurer Didn’t Meet Minimum Threshold in Spending Its Money on Medical Services and Quality Care

The Department of Managed Health Care (DMHC), responsible for protecting consumers’ health care rights and ensuring a stable health care system by overseeing managed health care plans in California, recently found Anthem sorely lacking in the amount of money it directs toward patient care. The insurer was forced to rebate nearly $63 million to consumers because of this failure. Learn more below about what is required of health plans in California when it comes to spending on healthcare. If your insurance company has been dealing with you unfairly by wrongfully denying claims, causing unnecessary delays or imposing unreasonable requirements, contact Gianelli & Morris in Los Angeles to speak with an experienced California insurance bad faith attorney.

Anthem Falls Short on Medical Loss Ratio Metric

A Medical Loss Ratio (MLR) is the percentage of premium dollars that a health insurance company spends on healthcare claims and quality improvement efforts, rather than on administrative costs, marketing, or profits. It’s a key metric for assessing how well insurance companies are using premium dollars to benefit their enrollees. The Affordable Care Act (ACA) requires small group health insurers to spend at least 80% of the premiums they collect on medical services and activities that improve the quality of care. Health plans in the large group market must spend at least 85% of premiums collected on claims and quality efforts.

In California, the DMHC annually reviews health plan compliance with MLR requirements of 85% in the large group market and 80% in the individual and small group markets. If a health plan does not meet the minimum MLR threshold, it must provide rebates to members and other purchasers, such as employers.

In 2023, six health plans were required to issue MLR rebates totaling $80.4 million for failing to meet the minimum MLR requirement during 2022. By a wide margin, the lion’s share of rebates was ordered to be paid by Blue Cross of California, aka Anthem Blue Cross. Anthem reported an MLR of only 78% in the small group market (plans for small businesses with 1-100 employees), well below the 80% threshold.

Anthem’s required $62.9 million rebate made up 778% of the $80.4 million assessed against all six insurers guilty of failing to meet their applicable MLR. The second biggest offender was UnitedHealthcare Benefits Plan of California, which reported an MKLR of 78.2% and was ordered to pay $15 million in rebates in the small group market. These two together made up 96.89% of the rebates required by the DMHC.

OptumHealth, meanwhile, had the lowest ratios of the six offenders and had to pay far less in rebates, although it still belonged to the dubious group of health plans failing to meet their required Medical Loss Ratios by not directing enough of their resources toward servicing claims and improving quality of care. Optum health plans covering both physical health and mental health claims fell short:

• U.S. Behavioral Health Plan of California (OptumHealth Behavioral Solutions of California) reported an MLR of 71.7% and paid $1.8 million in rebates in the large group market.
• ACN Group of California, Inc. (OptumHealth Physical Health of California) reported an MLR of 69.9% and paid $361,474 in rebates in the large group market.

Meanwhile, the County of Ventura (Ventura County Health Care Plan) came closest to meeting its mark of the six insurers that fell short. The county reported an MLR of 84.77% in the large group market and paid $242,609 in rebates. Managed Health Network paid $59,621rebates for reaching only an 82% MLR in the large group market.

Floors, not Ceilings

It’s important to note that the thresholds of 80% for small group market plans and 85% for large group market plans are only minimum requirements placed on insurers. Nothing in the law prohibits insurance companies from spending more of their resources on paying claims and improving quality of care; they just can’t go below the floor applicable to their market size. Health plans exist, after all, to cover the health care costs of their members and not merely to pay their corporate executives high salaries and rake in profits, although some insurance administrators may disagree.

Harmed by Insurance Bad Faith in California? Contact Gianelli & Morris for Help.

For decades, the law firm of Gianelli & Morris has been standing up for insurance policyholders when their insurers deny their claims by saying their requests aren’t medically necessary, are experimental or investigational, or for other reasons that don’t stand up to examination.

If your healthcare claim was wrongfully denied or if your insurance company is violating the law, Gianelli & Morris can help you get the benefits you are entitled to, along with compensation for additional harm done, including punitive damages in appropriate instances. Contact us today to talk about what happened and find out how we can help.