- L.A. Care, the nation's largest publicly operated health plan, was fined $55 million by state health regulators for alleged operational failures that resulted in "harm to members," California's Department of Managed Health Care announced Friday.
- Regulators said "immediate action" was required following investigations that revealed the plan allegedly failed to get members access to timely and medically necessary care.
- In addition to a backlog of more than 9,000 prior authorization requests, L.A. Care failed to properly address more than 67,000 grievances or appeals from its members.
L.A. Care said it was "surprised and disappointed with the unprecedented size of the state's proposed financial penalty," according to a statement provided to Healthcare Dive.
The $55 million fine is reportedly the largest in state history. L.A. Care said its fine is several times higher than what would have been assessed based on previous sanctions. The plan said the "penalties seem arbitrary and unnecessarily punitive." L.A. Care said it plans to contest the fines.
"What the state does not seem to factor into their equation is that a financial penalty of this magnitude creates yet another financial hurdle for a public health plan that is a crucial part of the health care safety net in Los Angeles County," according to the plan's statement.
The issues were first brought to light by a Los Angeles Times investigation that was published in 2020 and detailed patients' long waits for care, which resulted in deaths for some, according to the report.
State health regulators acknowledged their investigations were prompted by the Times' piece on the state's largest Medicaid plan.
The state's own findings revealed serious systemic failures.
One member received a colonoscopy in 2020 that revealed a possible lymphoma diagnosis. All L.A. Care oncologists were unavailable for several months, prompting a request to go out-of-network. L.A. Care initially denied the request to see the out-of-network oncologist and "significantly delayed" approval for a gastrointestinal specialist. The member ended up going to the emergency room three times while waiting for approvals.
"With being told that I may have less than a year to live, and then being forced to wait an unreasonable amount of time for the care and testing I need to survive, I felt like if I didn't go to the ER I might die," the member, referred to as "Enrollee C," told state regulators, according to the report. Enrollee C ultimately left L.A. Care, opting for a basic Medi-Cal fee-for-service plan.
The report details similar stories from other L.A. Care enrollees. State regulators said "the scope and breadth of its violations indicate deep-rooted, systemic failures that threaten the health and safety of its members," according to a statement released Friday.
The plan is facing two separate penalties; one $35 million fine from the Department of Managed Health Care and a $20 million sanction from the Department of Health Care Services.