Bolstering a chief complaint about Obamacare coverage, California regulators said two major health insurers violated state law by overstating the number of doctors available to patients.
More than 25% of physicians listed by Anthem Blue Cross and Blue Shield of California weren't taking Covered California patients or were no longer at the location listed by the companies, according to state reports released Tuesday.
In some cases, these errors led to big unforeseen medical bills when patients unwittingly ventured to out-of-network doctors for medical tests or a surgery.
The results of the five-month investigation come at a critical juncture as the second year of health law enrollment gets underway and more than 1.2 million Californians are shopping in the state's insurance exchange.
"We found the provider directories made available to the public had significant errors," said Shelley Rouillard, director of the California Department of Managed Health Care. "When you have a quarter or more of physicians that aren't available, that is significant."
Anthem and Blue Shield account for nearly 60% of enrollment in Covered California. The two industry stalwarts have long catered to patients wanting the widest selection of physicians.
As a result, their narrower networks and more restrictive policies were a jolt to many people and often came to light only when they were getting treated. The insurers compounded the problem with inaccurate provider lists, mislabeled insurance cards and false assurances about coverage, according to patients, doctors and regulators.
The latest findings could spark fresh criticism of Covered California, which has been faulted for going easy on its biggest health plans. Exchange officials said they welcomed the audit and insist they have pushed health plans hard to fix these persistent network problems.
The Department of Managed Health Care hasn't determined what penalties, if any, will be imposed on the insurance companies. The state plans a follow-up survey in six months to check whether the insurers have fixed the problems.
Consumer advocates urged officials to impose fines or take other measures immediately so patients will have reliable information for the current enrollment period through Feb. 15.
"These networks were narrower than advertised," said Anthony Wright, executive director of Health Access, a consumer advocacy group. "That's a big violation of trust to patients and needs to be corrected."
The stakes are high for Anthem and Blue Shield as they compete for new members and try to keep the ones they already have. The companies are also defending themselves against consumer lawsuits related to these network inaccuracies.
Both health plans disputed the state's findings and called the survey methods deeply flawed. The insurers added that physicians and their office staff bear some blame for giving patients the wrong information at times.
"The department's report exaggerates the severity of the issues and understates the extent of our corrections," said Blue Shield spokesman Steve Shivinsky. "We have taken substantial steps to address the confusion."
Anthem, a unit of industry giant WellPoint Inc., said there's no evidence that Californians are having widespread difficulty finding a network doctor.
The insurer said it contracts with 36,000 doctors statewide in its individual plans for 2015; Blue Shield lists more than 30,000 physicians.
Patient Darrell Done's experience at the doctor's office was typical for many under the Affordable Care Act. The 57-year-old real estate agent from Pasadena said he confirmed on Blue Shield's website in December that his longtime family physician was part of his network.
Then he went for a check-up in May and handed his new insurance card to the receptionist.
"She said, 'Oh. I'm sorry. This is an Obamacare policy, and Blue Shield changed all of their plans,'" Done recalls.
Done said he was upset at being locked into his plan until the next open enrollment.
"I'm trapped in a policy that's not what I thought it was," he said.
Redondo Beach resident Doug Evans, 62, bought a Blue Shield policy through Covered California a year ago only to find out later that his primary care doctor and orthopedic surgeon were no longer covered.
"There was no explanation that Blue Shield in Covered California would be this limited network," Evans said. "That's what ticked me off."
In response to consumer complaints, regulators hired an outside firm to check the accuracy of the two insurers' online directories as of mid-June by calling a sample of physicians. The PMPM Consulting Group placed thousands of calls in June and July.
For Anthem, the survey determined that 12.8% of doctors listed as in-network providers were not accepting Covered California patients. Another 12.5% were no longer at the location listed in Anthem's directory.
In examining Blue Shield, the state found that 8.8% of doctors listed were not taking exchange coverage and 18.2% were not at the location listed by the insurer.
Both companies sought to discredit the state's data. Anthem said 99% of its doctors described as unavailable in the state survey were under contract.
Blue Shield said 67% of providers who reported they weren't participating had submitted at least one claim for Covered California members.
Rouillard, the state regulator, said those arguments miss the point of the survey, which sought to replicate the consumer experience.
"If consumers are calling, they go on the information they're told," she said. "They don't know to dig into the contracts."
Peter Lee, executive director of Covered California, took a softer line with his two biggest health plans and agreed with some of their criticism about the survey questions being vague and confusing.
"I'm quite optimistic the bumps we had the first year were part of the transition to new networks," he said, "and we will see a lot smoother road going into 2015."
Last year, Lee promised Californians a comprehensive provider directory listing every health plan so applicants could easily search for doctors before signing up. But the exchange quickly scrapped its directory because of excessive errors.
Lee said the exchange will continue to refer applicants to health plan websites.
Physicians applauded the increased scrutiny, and they said health plans are responsible for communicating more clearly with doctors' offices.