Bright Health fined $1M over alleged denied claims errors, including for newborn care

Nebraska insurance regulators have imposed a $1 million penalty against Bloomington-based Bright Health over alleged errors with claims processing, including more than 100 cases of denied coverage for newborn medical care.

An investigation by the Nebraska Department of Insurance found more than 20,000 likely violations of state law and procedures, totaling more than $13.2 million in recoveries for health care providers and patients. Details were revealed in a market conduct examination report posted Friday.

Bright Health, which pulled out of almost all insurance markets nationwide this year, did not comment on the report.

In a consent order filed Friday, the company admitted that alleged conduct constituted "numerous violations" of state law and administrative code.

The exam found more than 1,000 instances where the health insurer said it wouldn't pay for services because of a lack of prior authorization even though internal documents show the insurer actually had granted approvals.

Bright Health also was requiring cost sharing for thousands of immunization claims, the report states. Federal law requires these services be provided with no out-of-pocket costs for patients.

"The company was found to have denied coverage for newborn dependents in no less than 163 cases during the examination period," according to the report. It cited "one notable case" where the company "failed to cover a claim for a newborn for which care was billed in excess of $200,000."

Nebraska regulators said that, in some categories, the level of errors with claims processing at Bright Health was so high it "would seem to indicate a conscious and flagrant disregard of the law," according to the report.

Regulators said they might not have documented all unacceptable or noncompliant practices by Bright Health due in part to "the company being uncooperative and dismissive of regulators questions in certain instances, hiding behind a veil of confidentiality that doesn't exist for a regulated entity."

"The examiners only reviewed a sample of the company's procedures and files," the report states. "The findings in this report are based on the data and responses received from the company … as well as from a total of 91 complaints."

During 2022, Bright Health had about 31,000 enrollees in Nebraska, or about one-third of the statewide enrollment in health plans for individuals under the federal Affordable Care Act.

Nebraska regulators focused on Bright Health's operations in the state between January 2020 and February 2022, although some findings pushed the scope into other time periods.

The examination looked at the accuracy of online listings for the provider network at Bright Health and found inaccuracies that led policyholders to believe that they had coverage for services when they didn't. This left policyholders "facing large bills for services for which they believed they had coverage," the report states.

Regulators reviewed 102 denied claims and found 46 errors for an error ratio of 45% — significantly higher, they said, than the historic 7% error threshold from the National Association of Insurance Commissioners.

"When a claim was determined to have been denied incorrectly, the company was prompted by the examiner to not only reprocess the incorrectly denied claim, but also to review additional claims denied for the same reason and the same provider," the report states.

During an on-site visit to the insurance company in July 2022, examiners discovered the problem with newborn claims being improperly denied. Bright Health officials said they became aware of the error the previous summer and changed their policies to fit with state law, which required that any insurance policy provide benefits for the newly born child of a subscriber for 31 days.

"Although the company became aware of the error in July 2021, the company did not attempt to correct claims that occurred prior to July of 2021," the report states. "… In October 2022, the company produced a claims impact report identifying 144 Nebraska claims. Only 88 of the 144 were reprocessed."

To settle and resolve issues related to the allegations, Bright Health agreed to pay an administrative penalty of $1 million, according to the consent order. Payment is deferred until Bright Health completes the runoff of its business including payments due to Nebraska policyholders and health care providers as well as certain risk adjustment obligations.

The consent order says the company was responsive with the Nebraska Department of Insurance and voluntarily entered into the settlement.

Bright Health was funded by the largest-ever IPO in Minnesota's history. It then suffered huge financial losses in its business of selling individual coverage for those under age 65 as well as Medicare health plans in several states.

Having abandoned most of its core health insurance business, the company is now focused on running a number of company-owned medical clinics while managing certain health insurance contracts for those and other clinics.

In September, Bright Health disclosed that it hadn't made full payment on its risk adjustment payments to the federal government and was entering into a $380 million repayment plan. The company plans to draw on proceeds from an expected sale of its last health insurance business, which operates Medicare health plans in California.