Health and Science

Centene unit fined $1.5 million, allowed to resume sale of Obamacare plans in Washington state after deal on doctor network size

Key Points
  • The Centene unit that sells Obamacare plans in Washington state was fined $1.5 million and allowed to resume enrollment after agreeing to address complaints about the size of its provider networks.
  • The state's insurance commissioner ordered the unit, Coordinated Care, to stop sales early in the week after receiving more than 140 customer complaints.
  • The shutdown occurred at the height of the Obamacare sales season.
Michael Neidorff, CEO of Centene Corporation.
Cameron Costa | CNBC

A Centene unit on Friday was fined $1.5 million and allowed to resume enrolling customers in new Obamacare plans in Washington state — three days after being ordered to cease sales over complaints there were not enough doctors in the insurer's provider network.

A spokesman for the Office of the Washington Insurance Commissioner said Centene's Coordinated Care unit had agreed to a consent order with the regulator to resolve the complaints about the size of its networks of doctors, specialists and hospitals covered by the insurer's plans.

That deal — reached at the height of the Obamacare sales season — came after more than a month of repeated failures by Coordinated Care to fix the problem.

The insurance commissioner's office said $1 million of the fine will be suspended "pending no further violations over the next two years."

The insurance commissioner said Coordinated Care "admitted to not having enough anesthesiologists in King, Snohomish, Pierce and Spokane counties."

"According to the company's own data, its provider network is also seriously deficient in other categories of providers, including immunology, dermatology, and rheumatology," the office said.

"I'm pleased that we have reached agreement with Coordinated Care to correct its inadequacies," said Insurance Commissioner Mike Kreidler.

"They understand the seriousness of the violations and made a commitment today to correct them. We will be monitoring the company very closely to make sure that policyholders are protected and they receive the coverage they've paid for."

Centene had no immediate comment.

The controversy came at a particularly bad time for Centene. Friday is the deadline for signing up for Obamacare plans that take effect Jan. 1, and the week leading up to such deadlines typically see the highest level of sales.

On Tuesday, Kreidler sent Coordinated Care a cease-and-desist letter ordering the insurer to stop advertising or selling any plans for 2018 in Washington, and to stop enrolling any new customers other than newborn children or new dependents of existing customers.

Kreidler said that since last May, more than 140 complaints had been sent to the regulator "related to Coordinated Care's inadequate network, such as insufficient anesthesiologists and out-of-network charges."

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Kreidler said an investigation found that Coordinated Care had an insufficient network of providers in a number of areas in the state, "including its largest service areas, such as King, Pierce and Spokane Counties."

After the investigation, Coordinated Care "admitted it failed to provide an adequate network of providers," according to the letter from Kreidler.

The insurer also admitted failing to monitor its network of providers.

Centene did not mention the problem with its health plans in Washington during a presentation to analysts in New York City on Friday.

Executives said they expect to add an additional 100,000 individual plan enrollees in 2018 after expanding to three new states, up from a membership of 1.2 million in 2017.

"When we look at our growth trends compared to [the federal Obamacare marketplace] we seem to be exceeding that," said Kevin Counihan, Centene senior vice president, who had served as CEO of that federal exchange in the Obama administration.

"Anecdotally it appears that we're moving ahead of where things are nationally, but we're not going to have final numbers ... for making that comparison for some time," Counihan said.

Centene stock price closed Friday down 4.3 percent, at $94.81 per share.