Blue Shield of California fined over denying payments for newborn care

California regulators have fined Blue Shield of California for denying payments for newborn care covered by parents' health plans, authorities announced Tuesday.

The Department of Managed Health Care said in a press release that it fined Blue Shield of California $300,000 for wrongfully denying payments for newborn care in two separate cases. Blue Shield of California also did not properly address and resolve repeated grievances or appeals related to the payment denials, the DMHC said.

In the two cases, the plan denied payment for the care provided to the newborns and failed to follow the law and coverage requirements specified in the members' coverage plans, according to the DMHC. Once case involved a child born in 2022 who was entitled to immediate coverage under the family's PPO plan, but the plan denied coverage, saying it had not yet begun. The other case involved a child born in November 2021, whose mother belonged to a medical group while the child was mistakenly assigned a different medical group, resulting in repeated claims denied as out-of-network.

"Welcoming a new baby should be a joyful time, not one made more stressful by a health plan's refusal to pay for newborn care that should be covered," DMHC Director Mary Watanabe said in a prepared statement. "In two separate cases, Blue Shield of California wrongly denied payments for newborn care and failed to correct the errors despite repeated complaints by the plan's members."

Blue Shield of California has not responded as of Tuesday afternoon to a request for a statement about the enforcement actions.

DMHC said most health plans are required to cover newborn care under their parents' policy, while parents have a grace period to enroll newborns in their health plan as a qualifying life event. California law also requires health plans to address and resolve member complaints or appeals within 30 days. 

California health plan members who are denied payment for covered health care services are urged to file a complaint with their health plan contact the DMHC Help Center if they have issues with the plan response to their complaints.