Anthem, Blue Shield Violated State Law, DMHC Report Finds

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Anthem Blue Cross and Blue Shield of California violated state law by misleading consumers about the size of their provider networks, according to a report by the state Department of Managed Health Care, the San Jose Mercury News reports (Seipel, San Jose Mercury News, 11/18).


Complaints of narrow networks have led to lawsuits filed against both insurers.

  • In July, Consumer Watchdog filed a class-action lawsuit alleging that Anthem:
  • Delayed giving its customers complete information until it was too late for them to switch their coverage choice;
  • Did not inform its customers that it no longer offered out-of-network coverage in four of the state's largest counties — Los Angeles, Orange, San Diego and San Francisco; and
  • Misled or did not inform its customers about which doctors and hospitals were participating in the insurer's new plans.

In September, Consumer Watchdog filed a separate lawsuit against Cigna and Blue Shield of California, alleging that the insurers:

  • Delayed giving their customers complete information until it was too late for them to switch coverage;
  • Offered inadequate provider networks; and
  • Presented inaccurate lists of participating providers (California Healthline, 9/26).

Details of Report

DMHC filed the report after a five-month investigation into allegations that the insurers were posting inaccurate provider lists (San Jose Mercury News, 11/18).

The report was based on surveys of doctors listed under the insurers' provider directories, according to the Sacramento Business Journal. DMHC investigators asked the providers about the status of their contracts with Covered California plans and whether they were accepting new patients (Robertson, Sacramento Business Journal, 11/18).


The DMHC investigation found that more than 25% of the providers listed in provider directories offered by Anthem and Blue Shield were not accepting patients with Covered California plans or were no longer at the location listed in the directory, the Los Angeles Times reports.

Specifically, among physicians listed as in-network providers for Anthem, the report found that:

  • 12.8% did not accept patients with Covered California plans; and
  • 12.5% had changed locations.

Among Blue Shield of California providers:

  • 8.8% did not accept patients with exchange plans; and
  • 18.2% had changed locations (Terhune, Los Angeles Times, 11/18).

According to the report, both insurers already implemented "corrective action," including:

  • Checking contract statuses with providers;
  • Contacting providers directly to confirm their status; and
  • Monitoring and improving the accuracy of the provider directories.

However, DMHC found that the insurers failed to fully correct three violations of California's Health and Safety Code related to inaccurate provider directories. As such, DMHC has referred the cases to its Office of Enforcement (O'Neill/Glickman, "KPCC News," KPCC, 11/18). The department has not yet decided whether to impose penalties.

DMHC plans to conduct follow-up surveys in six months to determine whether the violations have been corrected and whether the insurers are complying with state law, according to the Times (Los Angeles Times, 11/18).


Anthony Wright, executive director of Health Access California, said the findings are "deeply troubling," adding that DMHC should "impose fines and more importantly corrective action plans on insurers that can't keep their most basic commitment to consumers to have accurate and adequate networks and access to care" ("KPCC News," KPCC, 11/18).

However, Blue Shield of California spokesperson Steve Shivinsky, said, "The department's report exaggerates the severity of the issues and understates the extent of our corrections" (Los Angeles Times, 11/18).

Both Blue Shield and Anthem said the investigation's methodology was flawed. For example, providers who responded to the survey with "no answer" were recorded as not accepting exchange patients.

According to the Business Journal, both insurers conducted follow-up surveys and found more than 90% of their providers are contracted to accept patients with Covered California plans (Sacramento Business Journal, 11/18).

Anthem spokesperson Darrel Ng said the "vast majority of providers in our directory were correct" ("KPCC News," KPCC, 11/18).

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