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Insurance Commissioner Mike Kreidler orders Regence to fix problems

Post by Jordan Schrader / The News Tribune on Sep. 8, 2011 at 9:54 am |
September 8, 2011 1:17 pm

It’s not just state employees and retirees being affected by problems at Regence Blue Shield, Washington’s insurance commissioner says.

Last week I wrote about Regence’s delays in paying doctors for treatment of retirees and others who use the state’s Uniform Medical Plan as secondary insurance. The backlog of unpaid claims had reached nearly 300,000.

Now Insurance Commissioner Mike Kreidler is wading in. He said Wednesday he has ordered parent company Regence Group to develop a plan for correcting its problems, after meeting Sept. 1 with fellow regulators from Oregon, Utah and Idaho and Regence CEO Mark Ganz.

The previously reported delays in processing Medicare-related claims are the biggest of the worries, but others seem to be unrelated to those difficulties. For example, Kreidler said Regence’s computer system malfunctioned Aug. 5, causing more than 6,000 billing errors.

Patients’ bank accounts were debited for money they didn’t owe, probably because of inaccurate routing numbers, Kreidler said — and in more than 200 cases, the accounts belonged to people who weren’t even Regence customers.

Some withdrawals reached into the thousands of dollars, Kreidler said. And some of the bills that went to the wrong people contained Regence customers’ names and identification numbers, which weren’t supposed to be disclosed.

“The Regence Group needs to gets its act together,” Kreidler said in a statement.

And he added in an interview: “They claim that they’ve corrected a lot of these problems, but we need verification.”

Regence issued a statement, which follows, along with Kreidler’s news release and a memo his office prepared explaining the problems.

Regence statement:

Regence is currently experiencing some operational difficulties which have unfortunately impacted our ability to provide the level of service our members, customers and providers have come to expect of us. Our service level challenges are due in large part to a one-time system change at the beginning of the year, as well as a number of recent benefit changes under health care reform. While these issues are temporary, we deeply regret that we have fallen short on our service commitments to a small portion of our more than 1 million members, as it is our goal is to fully serve ALL of our members ALL of the time.

We deeply regret the inconvenience this has caused, and we are devoting all the necessary resources to correcting the problems. We are working closely with our impacted members, customers and providers, as well as state regulators as we implement actions to bring our service levels back up to our usual high standards as quickly as possible.

We have been in close contact with the OIC as we have worked through the issues, and we will continue to do so. Our primary concern is to provide the best possible service to our members, customers and providers, and we are focused on returning to the superior service levels we have provided for over 90 years.

Kreidler news release:

 

Kreidler orders Regence to correct health insurance problems

OLYMPIA, Wash. – Washington State Insurance Commissioner Mike Kreidler has ordered the state’s largest health insurer to correct problems that have affected tens of thousands of consumers.

“The Regence Group needs to gets its act together,” Kreidler said. “We’ve seen an ongoing pattern of errors and problems with Regence and its subsidiaries. Many of these problems directly harm consumers and health care providers.”

Among the current problems:

· Regence’s “SurePay” computer system malfunctioned on Aug. 5, 2011, resulting in more than 6,000 incorrect transactions.

· Medical claims from tens of thousands of retirees have gone unpaid for months.

· In more than 200 cases, the company apparently withdrew money from the bank accounts of people who are not even Regence members. Some of the withdrawals totaled thousands of dollars. In the process, some Regence members’ names and identification numbers were accidentally disclosed to strangers.

· Regence’s systems and processes result in after-the-fact denial of claims for many pre-authorized medical services.

· There is a pattern of claims being delayed because documentation has been misplaced by Regence, only to later be found.

· Regence’s underwriting department provided a phone number for consumer questions. When consumers called that number, they would receive a message saying that contact was available only on Thursdays. On Thursdays, there was no answer.

State insurance regulators from Washington, Oregon, Idaho and Utah called Regence Group CEO Mark Ganz to a meeting in Salem, Ore. Sept. 1 to discuss the problems.

The Portland-based company says it is working hard to investigate and correct the problems. Kreidler’s office is working with Regence to develop a mandatory corrective action plan.

“The status quo clearly isn’t acceptable,” said Kreidler. “Many of these things seem to be systemic problems, rather than isolated incidents.”

Regence and its subsidiaries have faced state enforcement actions recently:

· In August, Kreidler fined Regence BlueShield $100,000 for wrongly denying contraceptive claims from 984 women over a period of eight years. The company also paid the claims, which totaled $148,740.

· In September 2010, Kreidler ordered Regence BlueShield, Asuris Northwest Health and Regence BlueCross BlueShield of Oregon to stop wrongly turning down insurance applications for children.

· Also in 2010, Regence BlueShield, Asuris Northwest health and Regence BlueCross BlueShield of Oregon were fined $125,000 for violations, including failing to provide mandated coverage for prostate cancer screenings.

And here’s the memo Kreidler’s office put together for the Sept. 1 meeting:

Commissioner’s BriefingThe Regence Group

August 31, 2011

At the Washington State Office of Insurance Commissioner (OIC), the Company Supervision, Rates and Forms, Consumer Protection, and Legal Affairs divisions have been attempting to address Regence activity that adversely impacts policyholders and our ability to protect consumers. We have also consulted with the states of Oregon, Idaho and Utah about these issues. Their preliminary responses indicate that they have had similar experiences with Regence.

Washington has prepared a list – which we will supplement as we gather more information – of umbrella issues that adversely impact consumers. These include:

• Failure to proactively communicate with regulators

• Failure to institute lasting changes

• Failure to share regulatory concerns internally within Regence

• Failure to properly install a new IT system that serves all companies within the Group, and all plans, underwritten and self-insured, administered by a Regence company.

• Decentralizing Regence functions, which has created an apparent inability to quickly address new issues

Symptoms of umbrella issues include:

• Electronic network filing for the new product with limited network was significantly out of compliance and basically un-usable. Follow up suggests that network filings for all other Regence plans may be similarly flawed. Deficient network filings may have been an issue for all Regence companies for years.

• Long term failure by Regence to make statutorily- required filings of negotiated provider contracts was resolved only by way of a formal corrective action plan.

• Notice of rate increases must be delivered to policyholders at least 30 days prior to the effective date. Policyholder notices of an approved rate increase to be effective October 1, 2011, have not been mailed.

• Unreasonable denial of coverage for IUD removal. This issue was resolved only through enforcement activity. Regence failed to identify all consumers impacted by the denial during remediation who only came to light due to press coverage and follow-up complaints.

• Unlawful retention of commissions on Medicare Supplement policies.

• Last year, improper subrogation language in a contract was resolved by negotiation between the OIC and Regence. This year, the same improper language was again included in new contract filings.

• Regence implementation of requirements to cover persons under 19 was non-compliant and exhibited an unwillingness to reasonably-address needed corrections. More specifically, Regence required completion of documentation that was not legally appropriate for persons under 19, and did not become compliant until after the OIC issued a cease and desist order.

• Regence companies failed to submit Washington’s additional data information filing prepared according to instructions. Regence staff was present for at least two training sessions on how to file the form. After an unreasonably long period of discussion, Regence agreed to file the form but did not acquiesce to instruction requirements, leaving the issue unresolved. Regence did not correct its NAIC annual statement supplemental health exhibit for all Washington authorized Regence companies.

• Regence systems are incapable of proper coordination with Medicare and other coverages.

• Claims of 90,000 retirees have been unpaid since January 1, 2011. Perhaps as many as 300,000 individual claims may be involved.

• The SurePay system improperly-accessed approximately 6,400 accounts, adversely impacting policyholders and approximately 200 non-Regence-member persons. Regence volunteered no information to regulators in Washington, Idaho, and Utah, and when questioned by those regulators, provided inconsistent information to several regulators.

• Regence withdrew prior surgical authorizations within 72 hours of scheduled surgery without a reasonable basis.

• Regence responded to OIC inquiries with encrypted information even after it was made clear to Regence that the OIC cannot, by law, receive encrypted information.

• Regence maintains a practice of not cancelling groups for non-payment of premium until several months after the contractual time for cancellation. This practice adversely impacts policyholders and providers who receive and provide services for which coverage is subsequently denied.

• Regence’s claim processing is untimely and inconsistent indicating inadequate training and oversight of claims personnel.

• Regence’s processing of behavioral health claims raises these issues:

o Possible violation of the mental health parity law regarding both quantitative and non-quantitative limits – even after intervention and correction of processes in early 2010.

o Extreme and unreasonable backlog of unpaid claims

o Quantitative treatment limits- claims for more than 20 outpatient sessions systematically denied.

o Inability to pay claims as secondary to Medicare.

• Regence uses a renewal census system that calculates inconsistent census data in violation of Washington state law (RCW 48.44.010).

• Regence failed to furnish revised codes to providers until after plan start dates, and subsequently denied claims based on improper coding.

• Regence’s systems/processes consistently require policyholders and providers to make multiple requests before action is taken.

• Regence’s systems/processes result in after-the-fact denial of claims for many pre-authorized services.

• Regence’s improper reporting to the U. S. Centers for Medicare & Medicaid Services (CMS) resulted in an unreasonable delay in payment of claims for retirees.

• Regence’s unilateral changes to Medigap policies failed to provide adequate notice to policyholders, and adversely impacted policyholder checking accounts.

• Regence BlueCross Blue Shield of Oregon did not submit data call information – due on August 5, 2011 – until August 30, 2011, and then only because of the intervention of the OIC’s Chief Deputy.

• Regence’s communication to policyholders has been inconsistent in the areas of service benefits, changes to processes such as pre-authorization, filing of accident forms, and underwriting rules and practices.

• Consumer complaints to the OIC verify Regence’s poor customer service as identified by the following categories of complaints:

o Claim documentation “misplaced” by Regence but later “found” is a common pattern for delayed claims payments.

o Significant, unreasonable delays in claim processing and payment.

o Regence’s underwriting department provides a phone number for consumer questions. When consumers attempt contact through that phone number, they receive a message that contact is available only on Thursdays. On Thursdays the phone number does not work.

o Failure to notify providers when no payment will be made because an annual deductible has not been met.

• Regence routinely provides incomplete and inadequate responses to OIC complaint letters.

• An attempt by Regence to resolve billing cycle problems by “sliding” all renewal dates to March 1, adversely impacted consumers by sending duplicate billings to policyholders who had previously-paid premium for the period of October 2010 to March 1, 2011.

• The OIC’s financial examination of Regence BlueShield and Asuris Northwest Health as of December 31, 2010 is not sufficiently advanced to provide definitive findings. Some reporting and compliance issues as of December 31, 2010 are likely. Preliminary assessment of the issues presented above, particularly those related to the Facets implementation; suggest the possibility of a need to reassess risks on a go-forward basis.

These identified problems and symptoms are generated by Regence systems and processes that are in place for the entire Regence group. The problems financially impact policyholders and providers and produce an unreasonable and unnecessary frustration for both stakeholder groups. We believe the identified problems could also adversely impact financial reporting, rate filings, and possibly the solvency of Regence group members.

A united regulatory approach could cause The Regence Group to realize the benefit of a cooperative focus on resolving the many problems presented. We propose a documented cooperative process that will inventory all reported problems, and provide Regence with:

• a relatively short time in which to develop a detailed plan for remediation,

• a relatively short time for regulatory approval of that remediation plan,

• a reasonable time for Regence to complete remediation with regulatory monitoring.

We would then consider enforcement action after remediation is complete. The thrust of the plan must be to focus Regence on promptly correcting these problems

LYMPIA, Wash. – Washington State Insurance Commissioner Mike Kreidler has ordered the state’s largest health insurer to correct problems that have affected tens of thousands of consumers.
“The Regence Group needs to gets its act together,” Kreidler said. “We’ve seen an ongoing pattern of errors and problems with Regence and its subsidiaries. Many of these problems directly harm consumers and health care providers.”
Among the current problems:
· Regence’s “SurePay” computer system malfunctioned on Aug. 5, 2011, resulting in more than 6,000 incorrect transactions. 

 

 

· Medical claims from tens of thousands of retirees have gone unpaid for months.
· In more than 200 cases, the company apparently withdrew money from the bank accounts of people who are not even Regence members. Some of the withdrawals totaled thousands of dollars. In the process, some Regence members’ names and identification numbers were accidentally disclosed to strangers.
· Regence’s systems and processes result in after-the-fact denial of claims for many pre-authorized medical services.
· There is a pattern of claims being delayed because documentation has been misplaced by Regence, only to later be found.
· Regence’s underwriting department provided a phone number for consumer questions. When consumers called that number, they would receive a message saying that contact was available only on Thursdays. On Thursdays, there was no answer.
State insurance regulators from Washington, Oregon, Idaho and Utah called Regence Group CEO Mark Ganz to a meeting in Salem, Ore. Sept. 1 to discuss the problems.
The Portland-based company says it is working hard to investigate and correct the problems. Kreidler’s office is working with Regence to develop a mandatory corrective action plan.
“The status quo clearly isn’t acceptable,” said Kreidler. “Many of these things seem to be systemic problems, rather than isolated incidents.”
Regence and its subsidiaries have faced state enforcement actions recently:
· In August, Kreidler fined Regence BlueShield $100,000 for wrongly denying contraceptive claims from 984 women over a period of eight years. The company also paid the claims, which totaled $148,740. 

 

 

· In September 2010, Kreidler ordered Regence BlueShield, Asuris Northwest Health and Regence BlueCross BlueShield of Oregon to stop wrongly turning down insurance applications for children.
· Also in 2010, Regence BlueShield, Asuris Northwest health and Regence BlueCross BlueShield of Oregon were fined $125,000 for violations, including failing to provide mandated coverage for prostate cancer screenings.

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