final report of nonroutine examination of delta … · final report of non-routine exam of delta...

October 9, 2013 via USPS Delivery and eFile

Mr. Charles Lamont

Executive VP/Chief Legal Officer

Delta Dental of California

100 First Street

San Francisco, CA 94105

FINAL REPORT OF NONROUTINE EXAMINATION OF DELTA DENTAL OF

CALIFORNIA

Dear Mr. Lamont:

Enclosed is the Final Report of a non-routine examination of the fiscal and administrative

affairs of Delta Dental of California (the “Plan”), conducted by the Department of

Managed Health Care (the “Department”), pursuant to Section 1382(a) of the Knox-

Keene Health Care Plan Act of 1975.1 The Department issued a Preliminary Report to

the Plan on August 7, 2013. The Department accepted the Plan’s electronically filed

response on September 19, 2013.

This Final Report includes a description of the compliance efforts included in the Plan’s

September 19, 2013 response, in accordance with Section 1382(c).

Section 1382(d) states “If requested in writing by the plan, the director shall append the

plan’s response to the final report issued pursuant to subdivision (c). The plan may

modify its response or statement at any time and provide modified copies to the

department for public distribution not later than 10 days from the date of notification

from the department that the final report will be made available to the public. The

addendum to the response or statement shall also be made available to the public.”

Please indicate within ten (10) days whether the Plan requests the Department to append

its response to the Final Report. If so, please indicate which portions of the Plan’s

response shall be appended, and electronically file copies of those portions of the Plan’s

response exclusive of information held confidential pursuant to Section 1382(c).

1 References throughout this report to “Section” are to sections of the Knox-Keene Health Care Service

Plan Act of 1975, as codified in the California Health and Safety Code Section 1340, et seq. References to

“Rule” are to the regulations promulgated pursuant to the Knox-Keene Health Care Service Plan Act, found

at Title 28, Division 1, Chapter 1, California Code of Regulations, beginning with Section 1300.43.

Edmund G. Brown Jr., Governor

State of California

Health and Human Services Agency

980 9th Street, Suite 500

Sacramento, CA 95814

916-255-2438 voice

916-255-2280 fax

[email protected] e-mail

Mr. Charles Lamont, Executive VP/Chief Legal Officer October 9, 2013

FINAL REPORT OF NON-ROUTINE EXAM OF

DELTA DENTAL OF CALIFORNIA

If the Plan requests the Department to append a brief statement summarizing the Plan’s response

to the report or wishes to modify any information provided to the Department in its September

19, 2013 response, please provide the electronically filed documentation no later than ten (10)

days from the date of the Plan’s receipt of this letter through the eFiling web portal. Please file

this addendum electronically via the Corrective Action Plan system (“CAP system”)

within the Online Forms Section of the Department's eFiling web portal

https://wpso.dmhc.ca.gov/secure/login/, as follows:

From the main menu, select “eFiling”.

From the eFiling (Home) menu, select “Online Forms”.

From the Existing Online Forms menu, click on the “Details” for the DFO

Corrective Action Plan S12-N-092.

Go to the “Messages” tab

o Select “Addendum to Final Report” (note this option will only be

available for 10 days after the Final Report has been issued)

o Select the deficiency(ies) that are applicable

o Create a message for the Department

o Attach and upload all documents with the name “Addendum to Final

Report”

o Click “Send Message”

The Department finds the Plan’s compliance efforts are responsive to the deficiencies

cited and the corrective actions required, subject to the completion of the CAP the Plan

indicated it would complete by November 30, 2013. If the Plan fails to fully complete

the CAP addressed in the Final Report, then a referral will be made to the Office of

Enforcement for appropriate administrative action for any remaining, unresolved

deficiencies.

Please file the Plan’s CAP reports electronically via the CAP system within the Online

Forms Section of the Department's eFiling web portal

https://wpso.dmhc.ca.gov/secure/login/, as follows:

From the main menu, select “eFiling”.

From the eFiling (Home) menu, select “Online Forms”.

From the Existing Online Forms menu, click on the “Details” for the DFO

Corrective Action Plan S12-N-092.

Go to the “Data Requests” tab

o Click on the “Details” for each data request that does not have a status of

“Complete”

o Follow the instructions and/or use the form shown to add the requested

data (depending on the type of data requested: New Filing, Document

Request, Claims Data, or Financial Statement refile)

Mr. Charles Lamont, Executive VP/Chief Legal Officer October 9, 2013

FINAL REPORT OF NON-ROUTINE EXAM OF


The Department will also send the Plan an e-mail(s) for the items that are still

outstanding. The e-mail(s) will contain a link to the CAP system for the Plan to file the

response electronically.

Questions or problems related to the electronic transmission of the above responses

should be directed to Ted Zimmerman at (916) 255-2429 or email at

[email protected]. You may also email inquiries to [email protected].

The Department will make the attached Final Report available to the public in ten

(10) days from the Plan’s receipt of this letter through the eFiling system. The

report will be located at the Department’s web site at View Department Issued Final

Examination Reports.

If there are any questions regarding this report, please contact me.

Sincerely,

ORIGINAL SIGNED BY STEVEN ALSETH FOR

Stephen Babich

Supervising Examiner

Office of Financial Review

Division of Financial Oversight

cc: Christina Steele, Counsel, Delta Dental of California

Suzanne Goodwin-Stenberg, Chief, Division of Financial Oversight

Barbara Yaklin, Examiner, Division of Financial Oversight

Chrystal McElroy, Counsel, Division of Licensing

Laura Dooly-Beile, Chief, Division of Plan Surveys

BACKGROUND INFORMATION FOR DELTA DENTAL OF CALIFORNIA

Date Plan Licensed: March 22, 1978

Organizational Structure: Delta Dental of California (Delta), is a non-profit

California corporation. Delta is a member of

Dentegra Group Inc., a holding company that was

formed for the purpose of providing management

services to Delta and its affiliate companies. Delta

has ownership in the following companies as of

December 31, 2012:

DDC Insurance Holdings, Inc. 100.0%

Delta Dental of Puerto Rico 47.6%

Celebration Dental Services 100.0%

PaCa Management, LLC 50.0%

Type of Plan: Specialized health care service plan (dental)

providing cost reimbursement dental care programs

Provider Network: The Plan contracts with a network of providers for

the provision of dental care services.

Plan Enrollment: 18,718,000 as of June 30, 2012

Service Area: The Plan provides services throughout California.

Date of last Final

Routine Examination Report: March 23, 2010

FINAL REPORT OF A NON-ROUTINE EXAMINATION OF


This is the Final Report of a non-routine examination of the fiscal and administrative

affairs of Delta Dental of California (the “Plan”), conducted by the Department of

Managed Health Care (the “Department”) pursuant to Section 1382(a) of the Knox-

Keene Health Care Plan Act of 1975.1 The Department issued a Preliminary Report to the

Plan on August 7, 2013. The Department accepted the Plan’s electronically filed

response on September 20, 2013.

This Final Report includes a description of the compliance efforts included in the Plan’s

September 20, 2013 response to the Preliminary Report, in accordance with Section

1382(c). The Plan’s response is noted in italics.

The examination was conducted for good cause based on complaints received by the

Department from several providers of the Plan regarding claim processing.

The examination involved reviewing claims and provider disputes to ensure that the Plan

reimburses complete claims and processes provider disputes in accordance with the

Knox-Keene Act, and its accompanying regulations the periods beginning December 1,

2011 through February 28, 2012 and April 1, 2012 through June 30, 2012.

Section I. Compliance Issues

Section II. Non-Routine Examination

The Department finds the Plan’s compliance efforts are responsive to the deficiencies

cited and the corrective actions required, subject to the completion of the CAP the Plan

indicated it would complete by November 30, 1013.

1 References throughout this report to “Section” are to sections of the Knox-Keene Health Care Service

Plan Act of 1975, as codified in the California Health and Safety Code Section 1340, et seq. References to

“Rule” are to the regulations promulgated pursuant to the Knox-Keene Health Care Service Plan Act, found

at Title 28, Division 1, Chapter 1, California Code of Regulations, beginning with Section 1300.43.

Mr. Charles Lamont, Executive VP/Chief Legal Officer October 9. 2013

FINAL REPORT OF ROUTINE EXAMINATION OF

DELTA DENTAL OF CALIFORNIA Page 4

SECTION I. COMPLIANCE ISSUES

A. CLAIM SETTLEMENT PRACTICES – “UNFAIR PAYMENT PATTERN”

Section 1371.37 (a) prohibits a health care service plan from engaging in an unfair payment pattern.

Subsection (c) includes the following claim settlement practices as “unfair payment patterns”:

(1) Engaging in a demonstrable and unjust pattern, as defined by the department, of reviewing

or processing complete and accurate claims that result in payment delays.

(2) Engaging in a demonstrable and unjust pattern, as defined by the department, of reducing the

amount of payment or denying complete and accurate claims.

(3) Failing on a repeated basis to pay the uncontested portions of a claim within the timeframes

specified in Section 1371, 1371.1, or 1371.35.

(4) Failing on a repeated basis to automatically include the interest due on claims pursuant to

Section 1371.

Rule 1300.71 (a)(8) defines a "demonstrable and unjust payment pattern" or "unfair payment

pattern" as any practice, policy or procedure that results in repeated delays in the adjudication and

correct reimbursement of provider claims.

The Department’s examination found that the Plan is engaging in “unfair payment patterns” as

summarized in the following table:

Deficiency Type of

Sample

Total

Sample

Population

Total in

the

Sample

Number of

Deficiencies

Found

% of

Compliance

Failure to reimburse

claims accurately,

including paying interest

and penalty.

Late Claims 103,727 50 30 40%

Receipt Date of Claim

Entered Incorrectly into

the System.

Late Claims 103,727 50 8 84%

Receipt Date of Claim

Entered Incorrectly into

the System.

Paid Claims 1,197,343 50 5 90%

Date of receipt of claim

entered into the system

incorrectly.

Denied Claims 197,489 50 5 90%

Failure to deny a claim

within the required

Timeframe





Deficiency Type of

Sample

Total

Sample

Population

Total in

the

Sample

Number of

Deficiencies

Found

% of

Compliance

Improper denial,

adjustment or contest a

claim


The following details the unfair payment practices by the Plan found during the Department’s

examination:

1. INTEREST ON LATE CLAIM PAYMENTS

Section 1371 require a specialized health care service plan to reimburse uncontested claims no later

than 30 working days after receipt of the claim. Rule 1300.71(i)(2) requires that if an uncontested

claim is not reimbursed within 30 working days after receipt, interest shall accrue at the rate of 15

percent per annum beginning with the first calendar day after the 30th working day period. The

penalty for failure to comply with this requirement shall be a fee of ten ($10) dollars paid to the

claimant.

Rule 1300.71 (a)(8)(K) describes one unfair payment pattern as the failure to reimburse at least 95%

of complete claims with the correct payment including the automatic payment of all interest and

penalties due and owing over the course of any three-month period.

Rule 1300.71 (j) requires a plan or a plan's capitated provider that fails to automatically include the

interest due on a late claim payment shall pay the provider $10 for that late claim in addition to any

amounts due pursuant to section 1300.71(i).

Our examination of late claims found that the Plan underpaid, or did not pay interest on thirty (30)

out of fifty (50) late claims (a non-compliance rate of 60 percent) due to the Plan calculating

interest using working days rather than calendar days. In addition, the Plan did not pay interest on

adjusted claims.

They included late claim samples LP-1, LP-2, LP-4, LP-5, LP-6, LP-7, LP-8, LP-12, LP-14, LP-14,

LP-15, LP-17, LP18, LP-19, LP-20, LP-22, LP-23, LP-25, LP-26, LP-27, LP-30, LP-33, LP-36,

LP-37, LP-39, LP-41, LP-42, LP-46, LP-47, LP-49 and LP-50.

These violations will be referred to the Office of Enforcement for appropriate administrative action.

The Plan was required to submit a detailed Corrective Action Plan (“CAP”) to bring the Plan’s into

compliance with the above Section and Rule that should include, but not be limited to, the

following:

a. Identification of all late claims and adjusted processed from March 23, 2010 (date of the

most recent final report) to the present whose interest was underpaid.




b. Evidence that interest and penalties, as appropriate, were paid retroactively for the claims

identified in paragraph “a” above. This evidence is to include an electronic data

file/schedule (Excel or dBase) that identifies the following:

Claim number

Date of service

Date original claim received

Total billed

Total paid

Paid date

Interest amount paid

Date interest paid

Penalty amount paid

Additional interest amount paid, if applicable

Date additional interest paid if applicable

Check number for additional interest and penalty paid amount

Provider name

Line of business

Number of late days used to calculate interest

The data file is to provide the detail of all claims remediated; and, to include the total

number of claims and the total additional interest and penalty paid, as a result of

remediation.

c. Policies and procedures implemented to ensure that interest on late claims is calculated and

paid in compliance with the above Section and Rules.

d. Date the policies and procedures were implemented, the management position responsible

for overseeing the CAP, and a description of the monitoring system implemented to ensure

ongoing compliance.

If the Plan is not able to complete the CAP or portions of the CAP within 45 days of receipt of

this report, the Plan is required to submit a timeline (that does not exceed 180 days of receipt of

this report) with its response. If the Plan is not able to meet this timeframe, it must justify the

reason for the delay. The Plan is also required to submit monthly status reports until the CAP is

completed.

a. Identification of all late claims and adjusted processed from March 23, 2010 (date of the most

recent final report) to the present whose interest was underpaid.

The Department’s examination of late claims found that the Plan underpaid or did not pay

interest on late claims because the Plan was calculating interest based on working days instead

of calendar days. The Plan was also not consistently paying interest on adjusted claims. When

these inaccuracies were brought to the Plan’s attention during the on-site examination, it

immediately began the process of fixing its claims processing system, identifying providers who

were owed interest, and paying those providers.




The following key dates are important to know in order to understand the work the Plan has

done to mitigate the problems revealed in the examination:

April 11, 2011: Earliest stage of implementation of the new claims processing system called

“MetaVance”.

November 30, 2011: Conversion from Legacy system to MetaVance completed. Legacy

system is no longer used.

June 14, 2012: MetaVance was using logic of 30 business days to calculate the compliance

period to process claims. This logic was compliant with state law, but a consequence of this

logic was that the system calculated interest due on late claims based upon business days

instead of calendar days. Upon discovery of this, the Plan immediately changed the logic to

use only calendar days. The Plan configured MetaVance to calculate interest after 43

calendar days (which is the equivalent to 30 business days) from the original receipt date of

the claim. The Plan also began to apply interest on every calendar day after the 43rd

day.

Effective for checks dated June 14, 2012, interest accrues at the rate of 15% per annum

beginning with the first calendar day after the 43 calendar day period, and is paid on the

same check as the claim payment.

Plan also begins a review of all adjusted claims, in MetaVance that were processed between

April 1, 2011 to November 21, 2012, to identify those that for which the Plan did not apply

interest.

November 21, 2012: MetaVance updated to use adjustment codes to trigger interest payment

on adjustments where Delta is at fault for the adjustment taking over 30 working days to

process. From this date on, all adjustments that are necessitated by Delta error, and

processed after 30 working days, have interest applied to them.

April 1, 2013: Plan completes payment to providers who were identified in MetaVance as

claimants who were previously underpaid interest and who were owed interest on

adjustments. Payment included penalties of $10/claim. The Plan issued 27,987 checks

totaling $1,212,119.90 in interest and penalties for the period of April 1, 2011-November 21,

2012.

August/September 2013: Plan is working to identify late claim adjustments processed from

March 23, 2010 – November 30, 2011 in its old Legacy system that may not have included

appropriate interest.

The Department has requested the Plan go back to March 23, 2010, the date of its most recent

final report, to identify late and adjusted claims that were owed interest. The Plan identified and

paid interest on late claims and adjustments that were processed in its new claims processing

system, MetaVance, going back to April 1, 2011, the beginning date of its conversion to the new

claims processing system. Because the conversion was done in stages, the Legacy system was

still used up until November 30, 2011. Therefore, what remains is for the Plan to complete the

identification and payment of interest due on claims processed in its old Legacy system from

March 23, 2010 to November 30, 2011.




The Plan has already started the work to identify the claims processed in Legacy that may not have

included the correct application of interest, but because Legacy is no longer used and because

interest was applied manually, the Plan will need time to identify these claims. Once it has identified

the correct documents, the Plan will pay providers any interest owed plus penalties. The Plan

believes this last remaining part of the corrective action will take until November 30, 2013 to

complete. The Plan will submit corrective action status reports to the Department by the 9th of each

month. The reports will provide updates to the previous month’s activity.


identified in paragraph “a” above.

Listed below is a summary of the checks issued by the Plan and the status of the checks. This

summary captures the interest and penalties that were paid due to underpayment of interest on

working days instead of calendar days, and the nonpayment of interest on adjusted claims for claims

processed in MetaVance.

Additional Penalty Total

Checks Claims Interest per Claim Amount

Adjusted Claims 18,842 64,125 383,336.02 641,250.00 1,024,586.02

Calendar vs Working Days 9,145 16,570 21,833.88 165,700.00 187,533.88

27,987 80,695 405,169.90$ 806,950.00$ 1,212,119.90$

Cleared/Paid 95.97% 1,163,275.01

Outstanding 4.01% 48,624.14 *

Declined/Returned 0.02% 220.75

100.00% 1,212,119.90$

* Include checks reissued in May & June

Number of

c. Policies and procedures implemented to ensure that interest on late claims is calculated

and paid in compliance with the above Section and Rules.

The Plan underwent a major claims processing systems conversion in 2011. This conversion

experienced glitches commensurate with the complexity of a system conversion of this

magnitude, and the Plan regrets any delays and resulting underpayments experienced by

providers. The Plan has worked quickly to implement the necessary system changes to ensure

that interest on late claims, including adjustments, is calculated and paid in compliance with the

Act.

The Plan believes its current system is accurately paying interest on late claims and

adjustments, however, the Plan acknowledges that a written policy that clearly articulates its

standards is essential to compliance. The Plan’s policy to calculate and pay interest on late

claims and adjustments uses the following clear and simple principles: (1) Claims processed

late are paid with interest based on a determination of the number of late days multiplied by

amount owed and the daily interest rate; (2) when the Plan reconsiders a claim (disputes,

grievances, appeal, or quality review) and determines it is at fault, it will pay interest using the

original claim receipt date; and (3) when the Plan reconsiders a claim (disputes, grievances,

appeal, or quality review) and makes a new determination based on new or additional




information from the claimant (i.e. the Plan is not at fault), it will calculate and pay interest

using the date that new or additional information is received.

d. Date the policies and procedures were implemented, the management position responsible


ongoing compliance.

The Enterprise Policy and Guideline / Interest Calculation and Payment on Late Claims is a

new policy that became effective September 6, 2013. In addition to this new policy, the Plan

ensures oversight and monitoring for ongoing compliance with a matrix of requirements for

interest payments in all states in which the Enterprise conducts business, including of course

California. This Compliance matrix is maintained by the Plan’s Compliance department.

The Plan’s Finance department has a Configuration Lead, who is responsible for configuring

and maintaining the interest functionality in MetaVance. The Configuration Lead receives an

alert via email when any changes to the Compliance matrix are made and will update the

system accordingly.

The Plan also has controls and processes to safeguard the system from unauthorized and

erroneous changes. The Plan also has a QA process where any change made by the

Configuration Lead is validated by another staff member before the payment cycle is affected by

the change. These processes were put into place in June 2012.

Responsible Management Positions:

Alicia Weber – Senior Vice President of Finance

Garrett Leaf – Vice President of Enterprise Claims

Michael G. Hankinson – Senior Vice President, Legal & Chief Compliance Officer

The Department finds the Plan’s compliance efforts are responsive to the deficiencies cited

and the corrective actions required, subject to the completion of the CAP the Plan indicated it

would complete by November 30, 1013.

2. INCORRECT DATE OF RECEIPT

Rule 1300.77.4 requires all plans to institute procedures whereby all claims received by the plan are

maintained and accounted for in a manner which permits the determination of date of receipt of any

claim, the status of any claim, the dollar amount of unpaid claims at any time and the rapid retrieval

of any claim.

Rule 1300.71 (a)(6) defines the date of receipt as the working day when a claim is delivered to

either the plan's specified claims payment site, post office box, or to its designated claims processor.

Our examination disclosed that the date of receipt was not entered correctly into the claims system

on the following:

a. Eight (8) out of fifty (50) late paid claims (a non-compliance rate of 16%). They

included late paid claim samples LP-5, LP-6, LP-12, LP-13, LP-14, LP-17, LP-25

and LP-26.




b. Five (5) out of fifty (50) paid claims (a non-compliance rate of 10%). They included

paid claim samples P-1, P-16, P-18, P-28, and P-39.

c. Five (5) out of fifty (50) Denied claims (a non-compliance rate of 10%). They

included denied samples D-5, D-20, D-37, D-38, and D-50.

These violations will be referred to the Office of Enforcement for appropriate administrative action.

The Plan was required to submit a description of its process to ensure that the correct claim receipt

date is being captured in compliance with Rule 1300.71(a)(6). The Plan is also required to provide

the management position(s) responsible for compliance and a description of the monitoring system

implemented to ensure continued compliance with this Rule.

The Plan uses a software product from Sungard called “FormWorks” to process inbound paper

claims and electronic claims (EDI claims). The data is processed, formatted and then transmitted

from FormWorks into the Plan’s main claims processing system called “MetaVance.” In the early

implementation of MetaVance, FormWorks incorrectly recorded the receipt date on a small portion

of EDI claims by using the date of transmittal to MetaVance instead of the date the claim was

received by the Plan. The Department’s finding here is attributable to this error.

On April 2, 2012, a correction was made to FormWorks which resolved the EDI receipt date

transmission issue. The receipt date for electronic claims was corrected to show the date the EDI

file is received by the Plan. FormWorks now uses the BHT04 segment of the EDI 837 claims record

to populate the receipt date for that claim, regardless of when the EDI file transfers to the claims

processing system. For example, if an EDI file is received Thursday night before midnight, but the

EDI file is not transferred until Friday morning, the receipt date will still be Thursday’s date.

Whenever a code change is made to the FormWorks software, extensive testing and validation are

conducted to ensure receipt dates are accurately posted. Plan employees in Information Technology

(IT) and Operations business areas separately test for accurate receipt dates and must sign off on

the testing before a FormWorks code change is introduced into production.

Within the IT Department, responsibility for compliance and monitoring of these testing processes

belongs to: Hari Makkala, Vice President IT; Mark Hostetler, Director of Application

Development; and Shahab Haghnazari, Development Manager. Within the Operations business

area, responsibility for compliance and monitoring of these testing procedures belongs to: Garret

Leaf, Vice President, Claims; and Darien Smith, Director of Claims.

The Plan understands the claims receipt date is a key date for ensuring compliance with claims

processing turn-around time requirements. Thus, upon discovery of the dating error on a small

portion of its EDI claims, the Plan acted quickly to correct FormWorks on April 2, 2012. The Plan

adopted Metavance in order to have claims system that would process an average of 120,000

claims per day and pay providers quickly and more accurately than the decades-old legacy system.

But a conversion of this magnitude will encounter glitches. This dating error was not a situation of

the Plan trying to delay payments


and the corrective actions required.




3. FAILURE TO DENY A CLAIM WITHIN THE REQUIRED TIMEFRAME

Section 1371 requires a specialized health care service plan to reimburse uncontested claims no

later than 30 working days after receipt of the claim. This section also requires that if an

uncontested claim is not reimbursed within 30 working days after receipt, interest shall accrue at the

rate of 15 percent per annum beginning with the first calendar day after the 30 working day period.

The penalty for failure to comply with this requirement shall be a fee of ten ($10) dollars paid to the

claimant.

Rule 1300.71(a)(8)(L) states that the failure to contest or deny a claim, or portion thereof, within the

timeframes of section (h) and sections 1371 or 1371.35 of the Act at least 95% of the time for the

affected claims over the course of any three-month period may constitute a basis for finding that the

plan’s capitated provider has engaged in a “demonstrable and unjust payment pattern as set forth in

(s) (4).

Our examination disclosed that the Plan failed to deny three (3) out of fifty (50) claims within the

required timeframe (a non-compliance rate of 6 percent). They included denied claims D-11, D-21,

and D-47.

The Plan is required to submit a CAP to ensure that claims are denied timely in compliance with

Section 1371. The Plan is also required to provide the management position(s) responsible for

compliance and a description of the monitoring system implemented to ensure continued

compliance with this Rule.

The Plan completed its claims processing system conversion for its fee-for-service programs in late

2011. The Plan experienced higher than normal inventory from 4th

quarter 2011 through 2nd

quarter 2012 due to a reset of yearly benefits and new clients’ benefit start dates. The new system

had a steep learning curve and claims processing was slower, causing a temporary drop in

production which resulted in slightly elevated and higher than normal claims inventory. The Plan

immediately added staff resources at that time and drove the claims inventory down. The learning

curve for the new claims processing system was the main cause of the temporary slower processing

times. Since the conversion of its system the Plan has seen its inventory and processing times return

to normal.

The Plan implemented a corrective action a year and a half ago at the time of the temporary and

slight elevation in processing times by employing inventory monitoring in a multi-prong approach.

Each morning, the Claims managers hold a mandatory meeting to discuss the inventory needs for

the day at 8 am. The team focuses on maintaining a first-in-first-out (FIFO) inventory at all times.

The inventory is distributed equally among Claims staff. The Plan produces a morning, mid-day

and evening inventory report that is monitored by Claims management personnel. This report can

be produced or gathered at any time during the work day by any management personnel.

Another mandatory meeting is held at 1 pm with all Plan Claims management to review the

inventory and to discuss any new needs or issues that have arisen during the morning. The Plan has

an internal goal of 15-days for claims processing. Special attention is given to any claim nearing

the 15-day threshold, and those claims are adjudicated immediately.




The Plan has built staffing models to identify optimal staffing levels in order to maintain inventory

of 15 days or less. The Plan’s staffing models are updated each month for current data and are

evaluated against current staffing to ensure adequate staffing.

The Plan’s monitoring efforts have resulted in dramatically reduced inventory and improved claims

turnaround times. Between March 2012 and June 2013, the Plan processed approximately 99.96%

of all claims within 15 days, well within the applicable timeframe under the Act.

Within the Claims Department, responsibility for compliance and monitoring the claims process

belongs to: Garrett Leaf, Vice President Enterprise Claims; Darien Smith, Director of Claims; and

Jerry Cropley, Manager Claims.



4. IMPROPER DENIAL, ADJUSTMENT OR CONTEST OF A CLAIM

Rule 1300.71(d)(1) states that a plan or a plan's capitated provider shall not improperly deny, adjust,

or contest a claim. For each claim that is denied, adjusted or contested, the plan or the plan's

capitated provider shall provide an accurate and clear written explanation of the specific reasons for

the action taken within the timeframes specified in sections (g) and (h).

Our examination disclosed that the Plan denied incorrectly, due to human error, three (3) out of fifty

(50) denied claims (a non-compliance rate of 6%). They included denied claims samples D-37, D-

47, and D-50.

The Plan was required to submit a CAP to ensure that claims are denied in accordance with Rule

1300.71(d)(1). The Plan is also required to provide the management position(s) responsible for

compliance and a description of the monitoring system implemented to ensure continued

compliance with this Rule.

To reduce the occurrence of human errors during claims processing the Plan has implemented a

multiple prong approach: (1) training of audit staff in all areas of claims processing, (2) monthly

quality reviews of each staff members’ work, (3) “management by walking around” (MBWA), (4)

continual development and refinement of desk-level procedures and training, and (5) a 5-step

disciplinary process for those employees who are not responsive to training and development.

These steps are described in more detail below.

The conversion to a new claims processing system, MetaVance, presented a steep learning curve for

Plan staff, and initial training covered a large amount of content. The Plan’s corrective action

started more than a year ago to ensure its staff was adequately trained and supported on the new

system. To improve Claims’ monthly quality results, in the last 12 months all Claims Examiner II

staff received refresher training on Adjustments, Orthodontics and/or Claims Level II. Additionally,

all Managers, Supervisors and Claims Process Coordinators, regardless of role, have been trained

in every aspect of this work. This allows the Plan’s operations to run at maximum capacity with the

knowledge base to support each area.




Claims staff members meet with their Supervisor and Manager monthly to review their quality

sample for the previous month. Any errors are discussed in detail and followed up with a

personalized corrective action plan that is monitored each month.

In addition, Supervisors employ what is colloquially called “management by walking around” or

MBWA. MBWA starts with Supervisors meeting one-on-one with each staff member every day to

discuss the current business for the day, review questions, and discuss issues and concerns. As a

second step to MBWA, any topics identified as of importance to other team members and

Supervisors are shared through a daily huddle meeting.

As a fourth step, new or refined Desk Level Procedures (DLP) are written or updated and

distributed within the week when warranted. New and revised DLPs are compiled and incorporated

into the Plan’s on-going training program, thereby providing both continuing education and

training for new trainees.

The Plan follows a strict disciplinary process for employees who are not responsive to training and

development. This process consists of 5 progressive steps: coaching, verbal warning, written

warning, final notice and then termination. These steps are used when an employee does not comply

with the job and quality standards.

These combined efforts have been in place for over a year and are designed to reduce the number of

inaccuracies in the new claims processing system due to human error. The Plan has seen

improvements in accuracy as a result of its corrective action. Through the first six months of 2013,

the Plan has effectively improved every accuracy measure over the same period last year.

Within the Claims Department, responsibility for compliance and monitoring of these testing

processes belongs to: Garrett Leaf, Vice President Enterprise Claims; Darien Smith, Director of

Claims; and Jerry Cropley, Manager Claims.



B. PROVIDER DISPUTE VIOLATIONS

Rule 1300.71.38 (m)(2) states that the failure of a plan to comply with the requirements of a fast,

fair and cost-effective dispute resolution mechanism shall be a basis for disciplinary action against

the plan.

The Department’s examination found that the Plan failed to comply with the requirements of a fast,

fair and cost-effective resolution mechanism for providers as summarized below:

Deficiency Type of

Sample

Total

Sample

Population

Total

in the

Sample

Number of

Deficiencies

Found

% of

Compliance

Dispute date of receipt not

recorded in the system

correctly.

PDR

Sample 1 905 50 8 84%




Deficiency Type of

Sample

Total

Sample

Population

Total

in the

Sample

Number of

Deficiencies

Found

% of

Compliance

Dispute paid date > 5

working days from

determination date.

PDR

Sample 1 905 50 4 92%

Claim not paid accurately,


and penalty.

PDR

Sample 1 905 50 28 44%

Dispute date of receipt not

recorded in the system

correctly.

PDR

Sample 2 1,274 50 4 92%

Acknowledgement not

made timely.

PDR

Sample 2 1,274 50 3 94%

Dispute paid date > 5

working days from

determination date.

PDR

Sample 2 1,274 50 11 78%

Claim not paid accurately,


and penalty.

PDR

Sample 2 1,274 50 13 74%

The following details the provider dispute mechanism violations by the Plan found during the

Department’s examination:

1. DATE OF RECEIPT OF PROVIDER DISPUTE

Rule 1300.71.38 (a)(3) defines dates of receipt as working day when the provider dispute or

amended provider dispute, by physical or electronic means, is first delivered to the plans or the

plan's capitated provider's designated dispute resolution office or post office box.

Our examination disclosed that the dispute date of receipt was not entered correctly into the system

on the following provider dispute samples:

a. PDR Sample 1: Eight (8) out of fifty (50) provider disputes (a non-compliance rate of

16%). They included provider disputes samples PDR-5, PDR-8, PDR-10, PDR-27, PDR-33,

PDR-36, PDR-46 and PDR-50.

b. PDR Sample 2: four (4) out of fifty (50) provider disputes (a non-compliance of 8%). They

included provider dispute samples PDR-21, PDR-24, PDR-37, and PDR-48.

This violation will be referred to the Office of Enforcement for appropriate administrative action.

The Plan is required to submit a description of its process to ensure that the PDR receipt date is

being captured in compliance with Rule 1300.71.38(a)(3). The Plan is also required to provide the




management position(s) responsible for compliance and a description of the monitoring system

implemented to ensure continued compliance with this Rule.

Provider disputes may come into the Plan via its Mail Services department and also directly to

Grievance & Appeals (“G&A”), the Plan’s department charged with investigating, tracking and

responding to provider disputes. It appears that some newer staff members were using the date of

receipt of the provider dispute as the date the provider dispute was received by the G&A

department or staff member, rather than the date the provider dispute was received by Mail

Services. This incorrect logging of the receipt date resulted in a small number of provider disputes

having a receipt date that was one day off from the correct receipt date.

The Plan understands that the Rule requires the receipt date to be the date the provider dispute

physically enters the Plan. The Plan also understands the importance of recording receipt dates

correctly in order to meet its compliance with all tracking, acknowledgment and response

requirements. While this deficiency is accurate, all of the disputes listed in the Department’s

sample were responded to within the 45-day period required for provider disputes.

The Plan believes the best corrective action for this type of mistake is by training staff and having

processes in place that account for the different ways a provider dispute can enter the Plan. The

Plan enhanced its Mail Services’ routing process in June 2012 to ensure the capture of the physical

receipt date in the mail room. This receipt date is used consistently in all downstream operations.

All items received by Mail Services are scanned and automatically assigned a Document Control

Number (DCN), which includes the Julian date of receipt. These scanned and dated images flow

directly to the G&A department queue.

The Plan also updated its G&A Procedural Manual to reflect how the Plan captures and uses the

receipt date to manage provider dispute tracking. The Plan’s G&A department staff received

orientation training on these changes on July 16, 2013. Distribution of the final procedural

documents and training was completed July 30, 2013, with full implementation on August 1, 2013.

Lastly, the G&A department’s quality evaluation processes have been enhanced to check for receipt

date.

Within the G&A department, responsibility for compliance and monitoring of these procedures

belongs to: John Yamamoto, Vice President, Professional Services; and Alice Strobel, Manager of

Grievance & Appeals.



2. DISPUTE PAID DATE MORE THAN FIVE WORKING DAYS FROM

DETERMINATION

Rule 1300.71.38 (g) states that if the provider dispute or amended provider dispute involves a claim

and is determined in whole or in part in favor of the provider, the plan or the plan's capitated

provider shall pay any outstanding monies determined to be due, and all interest and penalties

required under sections 1371 and 1371.35 of the Health and Safety Code and section 1300.71 of

title 28, within five (5) working days of the issuance of the Written Determination.




Our examination disclosed that the Plan failed to pay additional amounts due providers within 5

working days from the determination letter date on the following provider disputes:

a. PDR Sample 1: Four (4) out of fifty (50) provider disputes reviewed (a non-compliance rate

of 8%). They included provider disputes samples PDR- 2, PDR-7, PDR-26 and PDR-42.

b. PDR Sample 2: Eleven (11) out of fifty (50) for PDR Sample 2 (a non-compliance of 22

percent). They included provider disputes PDR-2, PDR-7, PDR-9, PDR-12, PDR-13, PDR-

22, PDR-24, PDR-40, PDR-41, PDR-44 and PDR-46.


The Plan was required to file with the Department a CAP demonstrating that its policies and

procedures will ensure that payments are issued within five (5) working days of the determination

letter date in compliance with Rule 1300.71.38 (g). The Plan is also required to provide the date of

implementation and the management position(s) responsible for ensuring compliance with this

Rule.

Although the two provider dispute samples demonstrated that provider disputes were resolved in a

timely manner, payment on some provider disputes was not completed within 5 working days of the

dispute determination letter.

One of the requirements of the Plan’s claims processing system conversion was that all claim

payments are made out of the Claims department. The Plan generates claim payments once a week

through its Claims department. Provider disputes are investigated, tracked and resolved by the

Plan’s Grievance & Appeals (“G&A”) department. If the payment request by G&A missed the

weekly payment cycle managed through the Claims department, the date of the provider resolution

letter and the corresponding payment could be apart by more than 5 days. The Plan’s corrective

action takes into account the necessary coordination of two departments as impacting the timely

adjudication of provider disputes.

The G&A department now issues the provider determination letter concurrent with (within the 5

day window of) the issuance of the provider payment. This coordination closes any potential non-

compliant gaps. The G&A staff builds into the 45-day response time the payment cycle so that the

determination letter and payment are both sent within the required 45-days. The Plan will record

the dispute as “resolved” the day the determination letter is issued and payment is made within 5

days of release.

Within the G&A Department, responsibility for compliance and monitoring of these procedures

belongs to: John Yamamoto, Vice President, Professional Services; and Alice Strobel, Manager of




3. CLAIM NOT PAID ACCURATELY INCLUDING INTEREST AND PENALTIES

Section 1371 requires a specialized health plan to reimburse uncontested claims no later than 30

working days after receipt of the claim. This section also requires that if an uncontested claim is




not reimbursed within 30 working days after receipt, interest shall accrue at the rate of 15 percent

per annum beginning with the first calendar day after the 30 working day period.

Section 1371 and Rule 1300.71 require that all interest that has accrued shall be automatically

included in the claim payment. The penalty for failure to comply with this requirement shall be a

fee of ten ($10) dollars paid to the claimant. Section 1371 also requires that if the claim is contested

or denied by the plan, the claimant shall be notified, in writing, that the claim is contested or denied

within 30 working days after receipt of the claim by a specialized health plan. The notice that a

claim is being contested shall identify the portion of the claim that is contested and the specific

reasons for contesting the claim.

Rule 1300.71.38(g) states that if the provider dispute or amended provider dispute involves a claim

and is determined in whole or in part in favor of the provider, the plan or the plan's capitated

provider shall pay any outstanding monies determined to be due, and all interest and penalties

required under Sections 1371 and 1371.35 and Rule 1300.71, within five (5) working days of the

issuance of the Written Determination.

Our examination disclosed that the Plan did not pay interest and penalties on the following claims

that resulted from provider disputes:

a. PDR Sample 1: Twenty eight (28) out of fifty (50) provider disputes (a non-compliance of

56%). They included provider dispute samples PDR-1, PDR-5, PDR-6, PDR-7, PDR-8,

PDR-10, PDR-12, PDR-13, PDR-14, PDR-15, PDR-16, PDR-17, PDR-18, PDR-19, PDR-

20, PDR-22, PDR-23, PDR-24, PDR-30, PDR-32, PDR-33, PDR-34, PDR-35, PDR-38,

PDR-40, PDR-42, and PDR-43, and PDR-48.

b. PDR Sample 2: Thirteen (13) out of fifty (50) provider disputes (a non-compliance rate of

26%). They included provider disputes samples PDR-1, PDR-8, PDR-12, PDR-13, PDR-

24, PDR-28, PDR-35, PDR-36, PDR-39, PDR-41, PDR-44, PDR-46 and PDR-47.


The Plan was required to submit a detailed Corrective Action Plan (“CAP”) to bring the Plan into

compliance with Rules 1300.71.38(g) and 1300.71 and Sections 1371 that should include, but not

be limited to, the following:

a. Identification and retroactive payment of interest and penalties on all claims that resulted in

provider disputes paid from March 23, 2010 (date of last Final Report) to the present.


identified above. The evidence is to include an electronic data file/schedule (Excel or

dBase) that identifies specific fields of data, as identified in the Preliminary Report.

c. The data file is to provide the detail of all claims; and, to include the total number of claims

and the total additional interest and penalty paid, as a result of remediation.

d. Policies and procedures implemented to ensure that the payment of all late adjusted claims

include interest and penalty, if applicable, in compliance with the above Sections and Rules.




e. Date the policies and procedures were implemented, the management position responsible


ongoing compliance.

If the Plan is not able to complete the CAP or portions of the CAP within 45 days of receipt of this

report, the Plan is required to submit a timeline (that does not exceed 180 days from the receipt of

this report) with its response. If the Plan is not able to meet this timeframe, it must justify the

reason for the delay. The Plan is also required to submit monthly status reports until the CAP is

completed.

a. Identification and retroactive payment of interest and penalties on all claims that resulted in

provider disputes paid from March 23, 2010 (date of last Final Report) to the present.

Claims that are paid by the Plan as a result of a provider dispute are processed as adjustments in

its claims processing system. In order to identify all claims that resulted in provider disputes paid

from March 23, 2010 to present, the Plan had to review its previous claims processing system in

Legacy as well as its new claims processing system in MetaVance.

(1) The Plan has started the work to identify adjustments processed from March 23, 2010 to

November 30, 2011 in the Plan’s previous claims processing system in Legacy. The Plan is working to

identify the adjusted claims processed in Legacy that did not include the correct application of interest,

but because Legacy is no longer used and because interest was applied manually, the Plan will need time

to develop queries to identify and review these adjustments. Once it has identified the correct documents,

the Plan will make payment to providers of any interest owed plus penalties. The Plan believes this part

of its corrective action will be completed by November 30, 2013. The Plan will submit corrective action

status reports to the Department by the 9th of each month. The reports will provide updates to the

previous month’s activity.

(2) The Plan has identified adjustments processed from April 1, 2011 – November 30, 2012 in

the Plan’s new claims processing system, MetaVance, that were due interest. As explained in its

response to Deficiency A.1., the Plan has already paid providers the interest owed plus penalties.

This identification and payment of adjustments included all provider disputes paid during this time.

Please see attachments to response to Deficiency A.1 (attachments A1.a1, A1.a2, and A1.b1).

(3) Adjustments processed from November 30, 2012 to present continue to be processed in the

Plan’s new claims processing system, MetaVance. The Plan reviewed the provider disputes

processed November 30, 2012 to present, and identified those disputes that had interest and penalty

owing. The Plan has issued checks to providers for interest and penalty payments totaling

$3,979.57. Please see Attachment B3.2 - Phase 3 Provider Dispute, Interest and Penalty Payments.


identified above. The evidence is to include an electronic data file/schedule (Excel or dBase) that

identifies specific fields of data, as identified in the Preliminary Report.

The Plan made the retroactive payments on September 3rd

and 9th

of 2013. A detail list of the claim

and payment information, including the total number of claims, interest, and penalties paid by the

Plan is attached to this response as Attachment B3.2 - Phase 3 Provider Dispute, Interest and

Penalty Payments for a listing of the payments.




c. The data file is to provide the detail of all claims; and, to include the total number of claims and

the total additional interest and penalty paid, as a result of remediation.

Please see the Plan’s response to item b. above.

d. Policies and procedures implemented to ensure that the payment of all late adjusted claims include

interest and penalty, if applicable, in compliance with the above Sections and Rules.

Upon investigation of the provider dispute samples identified above, the Plan found several

opportunities for clarification of its policy and procedures regarding the payment of interest on

provider disputes. The Plan created a specific Enterprise Policy and Guidelines for Interest

Calculation and Payment on Late Claims which applies to the payment of interest on provider

disputes. Please see Attachment A1.c - Enterprise Policy and Guideline Interest Calculation and

Payment on Late Claims for an explanation of this policy. The policy and guidelines address

provider disputes that are handled as late adjusted claims and any assessment of applicable interest

and penalties.

Also, the Plan’s Grievance & Appeals (“G&A”) procedural manual was edited to capture the

requirement to pay interest, and includes instruction on how coordinate with the Claims area for

processing.

e. Date the policies and procedures were implemented, the management position responsible for

overseeing the CAP, and a description of the monitoring system implemented to ensure

ongoing compliance.

On September 6, 2013, the Plan implemented an Enterprise Interest and Penalty Payment Policy to

ensure that the Plan will pay any applicable interest and penalties owed to providers consistent

with state and federal regulations. Training of the Plan’s G&A staff on this policy was conducted

on September 9, 2013. Training of the Plan’s Claims department staff is ongoing.

In addition to ongoing quality monitoring within the Claims and G&A departments, a newly

retrospective monthly review has been established between the Claims and G&A departments in

accordance with the Enterprise policy. Compliance oversight is further supported by the Plan’s

Office of Compliance and Internal Audit departments.

Within the G&A Department, responsibility for compliance and monitoring of the provider dispute

procedures belongs to: John Yamamoto, Vice President, Professional Services and Alice Strobel,

Manager of Grievance & Appeals. Within the Claims Department, responsibility for compliance

and monitoring the claims process belongs to: Garrett Leaf, Vice President Enterprise Claims,

Darien Smith, Director of Claims, and Jerry Cropley, Manager of Claims.


and the corrective actions required, subject to the completion of the CAP the Plan indicated it

would complete by November 30, 1013.

4. ACKNOWLEDGEMENTS NOT MADE TIMELY

Rule 1300.71.38 (e)(1) requires a plan to provide acknowledgement within two (2) working days of

the date of receipt of the electronic provider dispute by the office designated to receive provider




disputes.

Rule 1300.71.38(e)(2) requires a plan to issue a provider dispute acknowledgement within fifteen

(15) working days from the date of receipt of the paper provider dispute by the office designated to

receive provider disputes.

Our examination disclosed that the Plan sent the acknowledgement letter untimely on three (3) out

of fifty (50) provider disputes (a non-compliance rate of 6%) for PDR Sample 2. They included

provider dispute sample numbers PDR-18, PDR-33, and PDR-40.


The Plan is required to implement procedures, and provide training to processors to acknowledge

written provider disputes within the required timeframe in compliance with Rule 1300.71.38 (e)(1)

and Rule 1300.71.38 (e)(2). The Plan is also required to provide the date of implementation and

training, the management position(s) responsible for compliance, and a description of the

monitoring system implemented to ensure continued compliance with this Rule.

The Plan reviewed the 3 provider disputes listed in this deficiency and found that the

acknowledgment letters for each dispute were sent timely according to the Plan’s provider dispute

tracking database. During the examination, however, an image of the acknowledgement letter was

not attached to these 3 case files to support the acknowledgement date that was captured in the

Plan’s tracking database.

The Plan understands that it was technically deficient in 3 cases by not having onsite all records

(i.e. the acknowledgment letters) it relied upon in handling the provider dispute. The Plan

acknowledges that having complete records is important to demonstrating compliance, however,

the Plan respectfully disagrees that this deficiency rises to the level of an enforcement action. The

Plan believes that the inadvertent mistake by a staff member to attach a copy of the

acknowledgment letter to the case file in 3 out of 50 samples does not show a "demonstrable and

unjust payment pattern." In fact, during its onsite review the Department drew two separate 50-

sample provider disputes, for a total review of 100 provider disputes over a six month period of

time. The examiners only found 3 instances where the acknowledgment letter was missing in the

case files; the acknowledgment date was recorded as compliant, but the Plan could not prove its

compliance.

To prevent future problems in demonstrating compliance, the Plan’s G&A Manual was updated to

explicitly include instructions regarding scanning the acknowledgment letter and filing it in both

the electronic and hard copy case files.

Additionally, the G&A Quality Review Assessment Form (used for internal quality control) now has

checkpoints to monitor acknowledgment timeframes and archiving of acknowledgment letters.

Please see Attachment B4.2 – Procedural Manual, Provider Dispute, Quality Monitoring. The G&A

staff were retrained on these requirements on July 30, 2013.

Within the G&A Department, responsibility for compliance and monitoring of these procedures

belongs to: John Yamamoto, Vice President, Professional Services and Alice Strobel, Manager of







C. OTHER PROVIDER DISPUTE DEFICIENCIES

The following details other provider disputes deficiencies found during our examination:

LACK OF ADMINISTRATIVE CAPACITY

Section 1367(g) and Rule 1300.67.3 require that health care service plans maintain “the

organizational and administrative capacity to provide services to subscribers and enrollees” and that

a plan’s organization administrative services and policies must “result in the effective conduct of

the plan’s business” and “provide effective controls.”

To demonstrate adequate administrative capacity, a plan must have an executive staff and support

staff sufficient to perform the necessary administrative functions of a health care service plan.

While a plan may make contractual arrangements for nondiscretionary, ministerial services, any

function that requires the exercise of any judgment, decision-making or discretion must be

performed by a plan employee, with the Plan’s management having the ultimate responsibility.

Furthermore, any non-discretionary functions that are delegated must be performed with oversight

by the plan’s management.

Our examination disclosed that the Plan does not demonstrate that they maintain the organizational

and administrative capacity to oversee the system migration of subscribers and enrollees as follows:

1. CALL CENTER ISSUES

The Plan’s call center representative did not provide correct benefit information or frequency

limitation when providers called on the following:

a. PDR Sample 1: Nineteen (19) out of fifty (50) provider disputes reviewed (a non-

compliance rate of 38%). They included provider disputes numbers PDR-1, PDR-5, PDR-6,

PDR-7, PDR-8, PDR-10, PDR-12, PDR-14, PDR-16, PDR-17, PDR-18, PDR-19, PDR-20,

PDR-24, PDR-34, PDR-35, PDR-42, PDR-43, and PDR-48.

b. PDR Sample 2: Eight (8) out of fifty (50) provider disputes reviewed (a non-compliance

rate of 16%). They included provider disputes PDR-3, PDR-12, PDR-16, PDR-18, PDR-42,

PDR-44, PDR-45, and PDR-46.

The Plan was required to provide a CAP that demonstrates that call center representatives are

providing accurate information to the providers that utilize the call center to resolve issues, that

adequate oversight is exercised by the Plan; and, that effective written procedures are in place to

avoid incorrect information being given to providers and endure compliance with Section 1367(g)

and Rule 1300.67.3.

The oversight programs and written procedures, both existing and new, which are deployed in the

Plan’s Contact Center to ensure the accuracy of information provided by Contact Center

Representatives (CSRs), are outlined below:




1. Written desk level procedures (DLPs) are posted to the customer service center portal page

(on the Plan’s intranet). The DLPs include detailed information for the Contact Center as

well as relevant information for other business areas that work with the Contact Center.

These are regularly reviewed and new DLPs are added as appropriate.

2. All new CSRs are trained over the course of a 3 or 4-week period to respond to basic

eligibility, benefits, and claims status inquiries. This includes classroom training, reviewing

Call Center policies and procedures, as well as practice calls. Once a new CSR (Level I

agent) is released to the floor, the CSR is closely supervised for two weeks to ensure that the

agent is responding to calls appropriately and understands when to refer specific calls to

Level II agents or a supervisor.

3. Level I CSRs promoted to Level II agents also complete a second round of training. This

training takes 3 weeks and is designed to insure that Level II agents can handle the more

complex questions that are referred to them by Level I agents. Each CSR must pass a test

demonstrating competency prior to graduation from the training class. Upon completion of

the training, CSRs receive additional development in a 2-week program that provides a high

level of supervisory oversight.

4. The Plan recognizes that some topics must be repeated and reinforced. Therefore, the Plan

has developed a refresher training program to provide retraining on specific topics. The

training must be completed for all CSRs. Please refer to Attachment C1.1a- Contact Center

Refresher Training Sessions and Attachment C1.1b- Gap Alignment and Refresher Training

Sessions, which summarize the training sessions held in 2012 and part of 2013, including

the instructor, number of attendees, etc.

5. The Plan has developed a new written procedure (effective July 8, 2013) to identify, review,

and correct instances where inaccurate information was provided to callers. Per this written

procedure, the Plan’s Grievance & Appeals (G&A) department (in the Professional Services

division) reviews all grievances and provider dispute cases where the cause of the grievance

was a result of a CSR providing inaccurate information to the caller. A Contact Center

supervisor reviews the voice file, and in those instances where it is validated that the CSR

gave misinformation that the caller reasonably relied upon, the CSR is counseled on the

details of the case in order to learn from the particular instance. Please refer to Attachment

C1.2- Misquote Policy and Procedure.

6. In order to track and understand patterns of CSR errors by identifying specific CSRs and

problematic topic areas, the Plan implemented (in February 2013) a new coaching database

which allows the Contact Center Management Teams to track and report on coaching

sessions completed with CSRs. The Plan upholds a standardized quality monitoring process

requiring Contact Center supervisors to review and score a minimum of 5 calls per CSR per

month for seasoned employees, and 10 calls per month for new hire employees during their

probationary period. All CSRs must maintain a quality rating of 92%. The supervisor will

review and coach to any concerns, including incorrect information, identified in the quality

review process.

7. To insure that providers properly understand their rights to file a dispute in those instances

where they disagree with the Plan, the Plan implemented a new on-line training application

for CSRs that describes the importance of dispute resolution and the instances when the




provider may want to file a dispute. Please refer to Attachment C1.3- Provider Dispute

Training Material. All Contact Center Representatives will complete this training by

December 31, 2013.

Within the Contact Center, responsibility for these oversight programs and written procedures

belongs to: Stephen Adamson, Vice President Contact Center Operations; and Stacie Derencin

Director Contact Center.



2. SYSTEM ERRORS

Our examination disclosed system issues resulted into errors in processing claims with dual

coverage, bulk reprocessing errors, and wrong member ID linkage on the following:

a. PDR Sample 1: Seven (7) out of fifty (50) provider disputes reviewed (a non-compliance of

14%). They included provider disputes PDR-3a, PDR-3b, PDR-13, PDR-30, PDR-38,

PDR-40, and PDR-45.

b. PDR Sample 2: Fourteen (14) out of fifty (50) provider disputes reviewed (a non-

compliance rate of 28%). They included provider disputes PDR-1, PDR-4, PDR-8, PDR-11,

PDR-13, PDR-14, PDR-19, PDR-21, PDR-22, PDR-24, PDR 28, PDR-39, PDR-41 and

PDR-47.

The Plan was required to provide a CAP that demonstrates that adequate oversight is exercised by

the Plan; and, that effective written procedures are in place to avoid system errors and endure

compliance with Section 1367(g) and Rule 1300.67.3. The CAP shall include the following:

a. Sufficient staffing to monitor the system migration process; and

b. Proper written procedures in place to reduce bulk processing errors and wrong member ID

linkage issues.

The Plan was also required to state the date corrective action was implemented and the management

position responsible for ensuring continued compliance with this Rule.

The system migration (conversion) that the Department examined in this survey was completed in

November 2011. So a discussion about whether Plan had adequate capacity to oversee the

conversion is largely moot. However, to ensure sufficient staffing to monitor any system

conversion, the Plan management responsible for the processes outlined below (Claims, Enrollment

& Billing, IT) work closely to monitor the systems, assess project scope and determine system and

business requirements. Once determined, management works together to allocate sufficient

resources from appropriate areas to ensure migrations, solutions and resolutions are fully

approved by upper management, fully tested prior to integration, and promptly corrected when

unforeseen issues are encountered.




The provider disputes reviewed by the Department’s examiners and cited above arose from claims

processing errors with varied root causes. Some errors were human errors and others were caused

by system errors that have been subsequently fixed by the Plan, as described below.

Dual Coverage

The Plan handles dual coverage in two ways:

1. “Dual Delta”

Dual Delta is when the Plan has both the primary coverage and the secondary coverage.

The Plan enhanced the Dual Delta experience for providers in the conversion from its

Legacy system to MetaVance. Now under MetaVance a provider only needs to submit one

claim because when the primary claim is processed, MetaVance knows there is other Delta

coverage and will automatically create a secondary claim for the secondary coverage. In

the prior Legacy claims processing system this was a manual process.

At system conversion to MetaVance, the Plan found instances where the primary and

secondary coverage for the same person was not properly linked. For example, if the

primary group submitted eligibility for Margaret Smith and the secondary group listed her

as Maggie Smith with the same address, the primary and secondary eligibility coverage did

not link because the groups submitted different data. Consequently, in this example, the

secondary claim was not automatically created because the eligibility was listed as Maggie

and not Margaret. Details about the processes established to correct this issue are discussed

below under the Wrong Member ID Linkage section.

2. Other Carriers are Primary.

When the other carrier is primary and the Plan is secondary, the Plan requires that the

claim be submitted with the primary carrier’s Explanation of Benefits (EOB). The Plan

receives EOBs from other carriers in numerous formats. The lines on the claim vary and are

not exactly the same as the lines on the EOB. Additionally, various carriers used different

column headings on the EOBs which make it difficult to accurately capture the data. As a

result, in some cases primary EOB data was not captured correctly. Since its conversion to

MetaVance, the Plan has implemented the following corrective actions to ensure accurate

COB processing with other carriers:

1. In June, 2012, a special FormWorks (FW) Coordination of Benefit (COB) queue was

created within the FW application. All COB documents are routed to this queue.

2. To ensure data capture changes were initially implemented correctly, the FW COB queue

was processed by more experienced FW Keyer staff, then training was extended to other

staff, and today all data entry staff is fully trained and all work in the COB queue.

3. Desk Level Procedures (DLPs) were developed, using specific examples of primary

EOBs from other carriers, and provided to the staff to ensure COB claims are processed

accurately.

4. All FW Keyer staff were then trained on the enhanced DLPs.




These efforts have increased the Plan’s ability to accurately capture and process COB claims. The

management responsibility for compliance and monitoring of these processes belong to: Garrett

Leaf, Vice President Enterprise Claims, Darien Smith, Director of Claims and Elsa Jacobo,

Manager Claims.

Wrong Member ID linkage

Post MetaVance conversion implementation, the Plan identified members with Multiple Personal

Identification numbers (PIDs) and began a data cleanup effort early in 2012. The problem is

generally one of groups submitting information about the same individual with different data. These

differences resulted in these enrollees being given multiple PIDs when, in fact, they are the same

person. Seeing an opportunity to improve the quality of the Plan’s data, its Enrollment and Billing

(E&B) and Information Technology (IT) departments developed demand queries to identify

potential members with multiple PIDs that can then be matched and resolved.

IT has implemented into the weekly production streams the ability to take multiple PIDs and

aggregate the data under one surviving PID. This job involves taking members with multiple PIDs,

evaluating other member data, and having the ability to consolidate all information (claims and

counters) under one surviving PID.

The E&B team has also enhanced reporting from the nightly Electronic Enrollment Process to

report on all multiple PID warnings in a separate report that can be reviewed and acted upon the

next business day. Additionally, the Plan’s Claims team advises E&B of any potential multiple PIDs

so that E&B can correct enrollment and merge two PIDs.

The management responsible for compliance and oversight of these processes belong to:

Jamal Nasr, Vice President Enterprise Enrollment and Billing and Patrick Healy, Director

Enterprise Enrollment.

Bulk Reprocessing Errors

Previously, the Plan’s Legacy system required each claim to be adjusted manually when

reprocessing of claims in bulk was necessary. The new MetaVance system now gives the Plan the

ability to automatically reprocess many claims at the same time for a variety of reasons. After

conversion implementation in 2012, the Plan found there was a specific part of this auto reprocess

function that needed to be refined. The refinement was applied to those situations where the system

would take a group of claims to reprocess, but really only a small subset of those claims needed to

be reprocessed. This resulted in many providers being paid for a service and then later receiving an

EOB showing a zero pay notation because the claim had been reprocessed. The Plan found the

reprocessing criteria being used by the system was too wide.

The Plan narrowed the reprocessing requirements and selected only those claims with the specific

impacted procedure code. The maturation and refinement process of this powerful tool has allowed

the Plan to assist providers with items such as fee changes and group clients with pricing rule

changes.

The management responsibility for compliance and monitoring of these processes belong to:

Hari Makkala, Vice President Application Development and Ginger Carpenter, Project Director,

Conversion & Integration.






SECTION II. NON-ROUTINE EXAMINATION

The Plan is advised that the Department may conduct a non-routine examination, in accordance with

Rule 1300.82.1, to verify representations made to the Department by the Plan in response to this

report. The cost of such examination will be charged to the Plan in accordance with Section 1382

(b).

No response is required to this Section.

final report of nonroutine examination of delta … · final report of non-routine exam of delta...

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