Health Net Fined $200,000 Over Gaps in Health Care for Transgender Policyholders

The debate about how to accommodate transgender individuals in America continues, flaring over issues such banning transgender people in the military and mandating that people use the bathroom that corresponds to the sex on their birth certificate. Amidst uncertainty, the California Department of Managed Health Care has sent an unequivocal message to the health insurers it regulates: paying for the health care of transgender policy holders is mandatory.

The debate about how to accommodate transgender individuals in America continues, flaring over issues such banning transgender people in the military and mandating that people use the bathroom that corresponds to the sex on their birth certificate. Amidst uncertainty, the California Department of Managed Health Care has sent an unequivocal message to the health insurers it regulates: paying for the health care of transgender policy holders is mandatory.

That message came from the California Department of Managed Health Care (DMHC) in the form of a $200,000 fine against Woodland Hills-based insurer Health Net last month. The penalty was levied against Health Net for failing to provide either gender reassignment surgery or related services to seven of its enrollees between 2013 and 2015.

According to the DMHC, Health Net’s decision violated California’s Insurance Gender Nondiscrimination Act. The agency issued regulations in 2013 stating that insurers had an obligation “to remove benefit and coverage exclusions and limitations related to gender transition services.” California is just one of six states mandating insurers pay for gender reassignment surgery and related care.

Health Net had declared at the time of the denials that the services were not covered benefits, according to correspondence from the DMHC. Among the services rejected were gender reassignment surgery, mastectomies, facial feminization surgery and testosterone injections. Four of the enrollees were told such coverage was excluded from their plans. The DMHC cited language in Health Net’s policies that specifically denied gender reassignment services. In three other cases, coverage was denied because the requested services were considered by Health Net to be cosmetic in nature.

The penalty is by far the largest against any insurer in California for denying coverage for transgender enrollees, and is the fifth largest levied among the more than 200 actions taken against Health Net since the DMHC was authorized to discipline insurers in 2000, records show.

DMHC spokesperson Rodger Butler noted that there has been one prior administrative penalty and fine against a health plan for violating the transgender discrimination law. Levied against Blue Shield of California last year, the $70,000 fine was partly because the plan did not assist a patient in finding a provider for gender reassignment, but also for not properly notifying the enrollee their coverage had been canceled for non-payment.

Despite the mandate, insurers have been at times reluctant to cover such care, according to Amanda Wallner, director of the LGBT Health and Human Services Network at the advocacy organization Health Access California in Sacramento. “What we have seen from insurers is that they are still kind of adapting to the guidance,” Wallner said. “It is a process of denying first, and making transgender patients file an independent medical review or an appeal to the denial.”

According to DMHC data, there have been roughly five-dozen independent medical reviews filed over gender reassignment surgery and related issues, all but one of which occurred during or after 2013. The reviews overturned every decision not to cover mastectomies or similar surgeries to assist with gender reassignment, including hysterectomies in transgendered men. When an independent medical review upheld a plan’s decision to reject coverage, it was for issues such as hair transplants or plastic surgeries on enrollees who already reasonably resembled their gender identity.

“Health Net has submitted an approved corrective action plan to the DMHC, and we have accepted the terms of the department’s settlement agreement. Health Net is acting in accordance with terms of the corrective action plan,” the company said in a statement provided to California Health Report.

In addition to the fine, Health Net agreed to reimburse the enrollees the cost of any gender reassignment-related care they paid for out of pocket. It also agreed to revise all its coverage policies to comply with the law by the end of September.

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