The California Department of Managed Health Care (DMHC) announced that it is launching an investigation of Anthem Blue Cross and Blue Shield to see if they violated state laws in the way they configured smaller networks of doctors and hospitals for patients enrolled through the Covered California exchange.

The San Francisco Business Times said the agency will start by contacting providers on the network lists to confirm that they participate. Unless investigators have access to lists not made available to the public, they will have to do what patients do: call each doctor and hospital in the insurance company networks and ask if they take Covered California patients. Then they have to call the insurance company to verify that information is correct, because often the two do not agree.

The investigation is expected to take two months followed by a 45-day response time for the two companies.

The Los Angeles Times reported that Blue Shield says its PPO network has grown, and now includes 64% of all the physicians and 82% of the hospitals in its regular network—the one for customers who aren’t getting a subsidy to pay for their insurance. That begs the question, how does Blue Shield know this?

Does it have a definitive list of doctors and hospitals in the Covered California network? If so, they should share it with customers and state investigators. If there is such a list published in a public forum, it has escaped the notice of Google and journalists who never mention it.

Once upon a time there was such a list, briefly, fluttering about on the Covered California website when it first opened, like a firefly that’s gone before you really looked at it and leaves you wondering what you might have just seen.

If you did see it, what you observed was a colossal mistake full of hundreds of wrong listings. Anthem Blue Cross later said more than 900 of its physicians were improperly listed.       

The state now says it might not have a functioning directory of providers until 2015. That would be after the November enrollment when customers are expected to make informed decisions about their health care.

Smaller networks were not a secret when the Affordable Care Act debuted last year, but their existence and importance crept up on a lot of unsuspecting people. America's healthcare industry has been using them since at least 1998, and the rise of PPOs, HMOs and POSs was based on restricted networks.

Legitimate publications were noting the Covered California deficiency as far back as June 2013, but no one had definitive numbers on network sizes. Chris Lewis wrote at HealthLeaders InterStudy that the newly unveiled Covered California premiums were lower than expected because of narrow networks “to make the financials work in a heavily-regulated environment.”

Lewis referenced a Times article that just 36% of Blue Shield doctors were in the exchange network. By January, the San Francisco Chronicle was quoting Blue Shield claims they had bumped the percentage up to 60%. No one provided links to those lists.

Everyone loves a list. Publishing empires have been built on that proposition. In this case, absence does not make the heart grow fonder. Lack of provider lists makes it pound a little harder, in a palpitating kind of way.

Right now, much of the attention surrounding Covered California is still on its relative success at signing up people, the slowing of healthcare cost increases and avoidance of the disaster its crummy website seemed to portend. Premium increases for the coming year are slowly beginning to garner some interest along with political discussions about giving California’s Department of Insurance commissioner some control over them.

Anecdotal stories continue to surface regularly about flummoxed people trying to coordinate their care with doctors and hospitals that may or may not be available to them while dealing with the financial hardship exacerbated by their insurance companies.

The Times story said the Managed Health Care department will be looking at potential illegalities, which very well may not include the lack of published network lists. As is often the case, the real scandal isn’t necessarily what’s illegal.

–Ken Broder

To Learn More:

Anthem, Blue Shield under Scrutiny over Narrow Obamacare Networks (by Chris Rauber, San Francisco Business Times)

California Probes Obamacare Doctor Networks at Anthem and Blue Shield (by Chad Terhune, Los Angeles Times)

Blue Shield of California Sued for Smaller Obamacare Network of Providers (by Ken Broder, AllGov California)