The Molina Healthcare offices in Downtown Long Beach. Photo by Brandon Richardson.

Molina Healthcare was fined $1 million by the California Department of Managed Health Care, the state announced last month, for failure to resolve tens of thousands of provider disputes in a timely manner, which resulted in payment delays.

Between September 2017 and September 2018, the Long Beach health care provider failed to acknowledge and resolve 29,124 provider disputes in the state-prescribed amount of time. In addition to the fine, which has already been paid, Molina paid $80.3 million to providers as well as $1.8 million in interest.

“It is important health plans promptly and accurately pay claims to hospitals, doctors and other providers when health care services are provided to enrollees to ensure the financial stability of providers, and the overall stability of the health care delivery system,” DMHC Director Mary Watanabe stated, adding that Molina’s “systemic failures” jeopardize the financial stability of health systems.

California law requires health plans to acknowledge disputes within two working days if submitted electronically and 15 working days if submitted via a physical form. Health plans must resolve or amend (with explanation) these disputes within 45 working days.

Molina agreed to take corrective actions, according to the state. Company representatives, however, did not respond to multiple requests for comment regarding the steps the firm is taking to ensure efficiency in terms of disputes and payments.

The state announced Molina is required to report information to the DMHC to demonstrate compliance with the law, in addition to the company’s internal actions.

In an email to the Business Journal last month, a company spokesperson said Molina “officially resolved” the issue with DMHC in 2019, adding that the deficiencies arose before the firm’s “recent turnaround.”

In May 2017, amid “disappointing financial performance,” the health insurance company fired its two top executives—CFO Dr. Mario Molina and his brother, CEO John Molina, the latter of whom is now the primary investor in the parent company that owns the Business Journal. The two are the sons of the company’s founder, C. David Molina.

“In 2020, DMHC conducted a routine audit … and the report showed no findings of Provider Dispute Resolutions,” the spokesperson stated. “Molina remains focused on serving its valued members, providers and state partners throughout California.”