Key Compliance Lessons from North Dakota's Examination of Sanford Health Plan
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The North Dakota Insurance Department's recent market conduct examination of Sanford Health Plan offers critical insights for health insurers' compliance programs. The examination revealed several compliance gaps, most notably in mental health parity compliance and benefit tracking.
Mental Health Parity Implementation
A major finding involved improper tracking of mental health benefits. The company failed to accurately monitor mandated free services - five visits for substance use disorders and five hours for mental health outpatient care. The shift from tracking hours to counting visits regardless of duration potentially restricted member access to entitled benefits.
Medicare Supplement and Fraud Detection
The examination uncovered concerning error rates in Medicare Supplement application processing (47% failure rate) and inadequate fraud detection protocols. Between 2016-2018, the insurer operated without a Special Investigations Unit or comprehensive antifraud plans.
Compliance Impact During Growth
Despite significant growth (31% premium increase and 18% membership growth), the company struggled with fundamental compliance requirements. This underscores the importance of scaling compliance programs alongside business expansion.
Action Items for Insurers:
1. Verify proper accumulator tracking for mental health benefits
2. Implement robust application processing controls
3. Establish comprehensive fraud detection systems
4. Review coordination of benefits procedures
5. Maintain accurate benefit tracking during system changes
The examination's findings highlight why insurers must regularly test compliance controls and maintain detailed documentation of monitoring procedures, especially during periods of rapid growth.
[Note: This article is intended for informational purposes only and does not constitute legal advice. Companies should consult with their legal counsel regarding specific compliance requirements.]
