Both of California's health insurance regulators said they will investigate how Aetna Inc. makes coverage decisions, as the lawsuit of a California man who is suing the nation's third-largest insurer for improper denial of care heads for opening arguments on Wednesday.
The Department of Managed Health Care, which regulates the vast majority of health plans in California, said Monday it will investigate Hartford, Ct.-based Aetna after CNN first reported Sunday that one of the company's medical directors had testified in a deposition related to the lawsuit that he did not examine patients' records before deciding whether to deny or approve care. Rather, he relied on information provided by nurses who reviewed the records -- and that was how he was trained by the company, he said.
Insurance Commissioner Dave Jones had already told CNN his office would investigate Aetna, which he reconfirmed in a statement Monday.
"If a health insurer is making decisions to deny coverage without a physician ever reviewing medical records, that is a significant concern and could be a violation of the law," Jones said.
It is unclear how widespread the review of patient claims by non-physicians is in the industry or whether other insurers will feel compelled to revisit their practices.
The California Department of Insurance, which Jones heads, regulates only a small fraction of the state's health plans, but they include several Aetna policies. He has previously criticized Aetna for "excessive" health insurance rate hikes, though neither his agency nor the managed health care department has the power to stop the increases.
Jones' investigation of Aetna will review denials of coverage or pre-authorizations during the tenure of the medical director who testified in the California lawsuit, Jay Ken Iinuma, who has since left the company. Insurance department investigators will also look into Aetna's procedures for managing medical coverage decisions generally.
The dual investigations come as federal regulators are examining a planned $69 billion purchase of Aetna by pharmaceutical giant CVS -- a deal that many experts believe could transform the health care industry.
It's unclear how the investigations might affect Aetna's future coverage decisions, or those of other insurers, said Shana Alex Charles, an insurance industry expert and assistant professor at California State University-Fullerton. But she praised the decision to investigate as exactly what insurance regulators should be doing. "Without that strict oversight, corners get cut," Charles said.
Scott Glovsky, the lawyer representing the California plaintiff, Gillen Washington, said he and his client were "very pleased" by the news that Aetna will be investigated. Speaking Monday, before the managed care department said it would also investigate, Glovsky said his client brought the case "to stop these illegal practices, and we're looking forward to the insurance commissioner's investigation so we can make things safer for Aetna patients."
Washington, of Huntington Beach, had been receiving expensive medication for years to treat a rare immune system disorder known as Common Variable Immune Deficiency.
But in 2014, Aetna denied the college student's monthly dose of immunoglobulin replacement therapy, saying his bloodwork was outdated. During the appeal process, Washington developed pneumonia and was hospitalized for a collapsed lung.
In recent years, as California Healthline reported last June, patients with similar diseases have faced increasing difficulty getting their insurers to approve treatments, according to clinicians and patient advocates.
In an emailed statement on Monday, Aetna did not directly address the question of case reviews by non-physicians. It said its "medical directors review all necessary available medical information for cases that they are asked to evaluate. That is how they are trained, as physicians and as Aetna employees." It added, "adherence to those guidelines, which are based on health outcomes and not financial considerations, is an integral part of their yearly review process."
Aetna also noted that it has paid for all of Washington's treatments since 2014 and continues to do so.
Aetna said in previous documents filed in the lawsuit that it is standard for people with Washington's immunodeficiency disease to get regular blood tests and that Washington had failed to do so. But Washington's attorney said his client clearly needed the medication and that Aetna's action violated its contract with Washington.
Charles, the professor, said she was most surprised by the fact that Iinuma had admitted not only that he hadn't reviewed Washington's medical records personally, but also that he had no experience treating his disease. The burden should be on insurers to demonstrate why treatment should be stopped, not on doctors and patients to show why it should be continued, Charles said.
"It's easy to see the cases as just files and not people standing in front of you," she said.
Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation which is not affiliated with Kaiser Permanente.
