State says 3 health insurers denied medically necessary therapy

California officials said three of the state’s largest health insurers illegally denied speech and occupational therapy to patients, and regulators fined one of the companies, Health Net Inc., $300,000 for repeated violations.

The state Department of Managed Health Care said Monday that it ordered Health Net, Anthem Blue Cross and Blue Shield of California to stop denying medically necessary therapy in cases of developmental disabilities, autism and other medical conditions. The state said the three insurers will be required to reimburse patients who paid out of pocket for these improperly denied treatments.

“Medically necessary speech and occupational therapy are basic healthcare services that health plans must cover,” said Brent Barnhart, the state healthcare agency’s director. “Today’s actions will ensure that members receive the care required by law.”

Patient advocates applauded the state’s move.


“These types of therapy are very important for kids in terms of their development,” said Beth Capell, a policy consultant for consumer group Health Access. “We are pleased the state is moving forward to require that children get access to care.”

California officials singled out Health Net for the only fine, saying the Woodland Hills insurer repeatedly ran afoul of state law.

Health Net said an appeal is possible.

“Once we have finished our review, we will consider all of our options,” spokesman Brad Kieffer said.


The healthcare agency said it had received 41 complaints about Health Net’s coverage of speech or occupational therapy since January 2010.

Health Net reversed its decision on five cases after the state intervened, and an independent medical review found that therapy was medically necessary in 35 of the remaining 36 cases. Officials said Health Net’s actions unnecessarily delayed care by an average of 88 days.

The state said it had received 24 complaints from Anthem Blue Cross members since 2010, and an independent medical review determined that therapy was necessary in each case.

Likewise, the outside medical review sided with 14 complaints over speech therapy filed against Blue Shield since 2011.

Both Anthem Blue Cross, a unit of WellPoint Inc., and San Francisco nonprofit Blue Shield said they are reviewing the state’s allegations and they pledged to work with the state healthcare agency to resolve any compliance issues.

Twitter: @chadterhune

Get our weekly California Inc. newsletter