Oxford's problems include difficulty in timely payment of claims, weakness in generating complete data on its operations and a lack of procedures to ensure compliance with New York Insurance law and regulation.
Oxford has agreed to take the following actions, some of which are already under way:
- Evaluate, augment and replace senior management in consultation with its Board.
- Strengthen the Board of Oxford's parent, Oxford Health Plans, Inc., by the addition of at least two outside directors.
- Retain an outside management consultant to evaluate Oxford's information systems, internal controls and management reporting.
- Establish internal controls and procedures capable of generating reliable data
concerning claims, premiums and expenses.
Oxford violated New York Insurance Law by using an unapproved HMO application form and by issuing unapproved contracts. In addition, Oxford violated the law by using contracts with rates other than those on file with the Department.
Oxford has ceased use of unapproved forms, contracts and rates, and has undertaken a program to refund or to credit all amounts collected incorrectly. All subscribers who were charged unapproved premium rate increases before December 1, 1997 have received full restitution. In total, Oxford refunded or credited approximately $212,000. Within sixty days, further refunds of approximately $41,000 will be issued to subscribers whose rates were improperly increased in December 1997.
Oxford entered into a relationship with FairCare in 1995. Under the terms of an agreement, FairCare agreed to attempt to secure a discount for Oxford for non-participating hospital claims in excess of $5,000 and non-participating physician claims in excess of $2,000. If the provider accepted a discount, FairCare faxed a discount agreement to the provider's office for signature and return. Under this agreement, even though the provider agreed to a discount, a subscriber was still required to pay his or her full share of the co-insurance to the provider, usually 20 to 30% of the undiscounted fee, and did not get the benefit of the discount.
In May, 1997, the Department notified the company that this practice may be a violation of law, as well as that it may be contrary to its subscriber agreements. Oxford immediately discontinued this program.
In addition, Oxford has agreed to make full restitution to all relevant subscribers of the amounts required to bring the co-insurance paid by subscribers to the contractually specified percentage. Within 90 days, Oxford will send such refunds with 9% interest to all subscribers who were affected by the FairCare discount.
Oxford has difficulty in paying claims in a timely and accurate manner and the current claims processing cycle times requires improvement. Claims processing problems include:
Erroneous denial of valid claims based on lack of authorization.
Erroneous denial of valid claims based on lack of coverage.
Erroneous denial of valid claims during the adjudication process.
For example, in December 1996, Oxford had approximately $108 million in suspended claims, yet could not determine the aging of those claims. Oxford failed to issue a letter or card to subscribers for cases where it took more than 15 days to process a claim, as required by Department Regulation 64.
Oxford has agreed to establish procedures to address delays in claims logging and processing, including procedures for prompt resolution of suspended claims. Oxford has agreed to implement an extensive reporting of suspended claims and to establish a procedure to monitor the progress of the processing of suspended claims. In addition, Oxford is committed to generating reports by customer-service teams to ensure supervision regarding suspended claims. Oxford shall issue a letter or card to subscribers in cases where it takes more than 15 days to process a claim, as required by Regulation 64.
Oxford has not complied with the Administrative Rules and Regulations of the Health Department, and its own policy, in that it does not respond in writing to grievances/complaints within 15 days. The regulation requires Oxford to advise individuals filing grievances that the resolution of the grievance is complete or in process, with an actual resolution and explanation to follow in a timely manner.
Oxford also did not provide written responses to inquiries made by the Insurance Department's Consumer Services Bureau in a timely manner. These inquiries had been made regarding policyholder complaints received by the Department. Oxford does not maintain its complaint files in a complete and thorough manner.
Oxford shall comply with the Administrative Rules and Regulations of the Health Department, and its own policy, by responding in writing to grievances/complaints within 15 days. Oxford has agreed to respond in a timely manner to inquiries made by the Department's Consumer Services Bureau. Oxford has hired three additional staff members to address complaints and plans to increase its complaint process group in the first quarter of 1998. Oxford has agreed to maintain its complaint files in a complete and thorough manner.
Oxford must act more aggressively in investigating and reporting all cases of suspected fraud.
Oxford has agreed to increase the staff of its Fraud Division so that frauds can be detected and investigated more effectively. Oxford has already hired additional staff members and has plans to add another 4-6 staff within the next six months. Oxford has agreed to track the referral date of fraud allegations and to improve the organization of its fraud case files to ensure that documentation is complete.
As part of the review of Oxford's claims practices and procedures, it was determined that many of Oxford's explanation of benefits statements were difficult to read and understand, were not always mailed to the subscriber and/or provider of the service and in certain cases were inaccurate and/or inconsistent.
Oxford has undertaken a redesign of its benefits statements to make them easier for the subscriber and provider to read and understand, has agreed to mail copies of these statements to the subscribers and/or the providers of the services in all situations, and has undertaken an extensive audit of the benefit statement process to prevent this from occurring again.
Oxford did not comply with New York Law, by among other things, utilizing and paying commissions to unlicensed insurance agents, brokers and employees to solicit sales.
Oxford acknowledged that it must ensure that its agents, brokers, and employees maintain the requisite licenses and be subject to the 4 percent commission limits imposed by regulation.
IN ADDITION, OXFORD HAS AGREED:
- That it will not include the $3 million penalty as an expense in any future rate
application or filing made with the Department.
- To retain for the next three years the services of an independent auditing firm for the
purpose of conducting three annual compliance audits and advising the Board of Directors,
in writing, whether Oxford has fully complied during the audit period with all of the
recommendations contained in the Department's examination report including all remedial
actions.
- To provide a copy of the market conduct report and its stipulation with the Department to each member of its Board of Directors and to submit to the Department their acknowledgments of having received and read it.
The Department intends to conduct a follow-up examination in a reasonable time to determine the status of corrective actions required as the result of this agreement.
A copy of the three page stipulation signed by
Oxford and the Department as well as a full copy of the Department's market conduct report
is available upon request.
