When a health insurance customer hears from the insurance company, it’s a safe bet the customer isn’t smiling.

Rates are going up – again. Your medication is no longer covered – sorry. Coverage for that procedure your doctor recommends – denied.

So it’s no surprise that customers of Blue Cross and Blue Shield have reacted warily to the recent spate of cold calls they’ve been receiving from the Chapel Hill-based health insurer. Some customers say they’re busy, or doing just fine, thank you very much. Others ask how their name popped up on the Blue Cross call list.

Blue Cross, the state’s largest health insurer, is engaging in an experiment that may one day become standard practice in private health insurance, as the industry contends with rising costs. Using a computer algorithm to identify customers, Blue Cross is deploying teams of nurses and doctors to intervene with customers who drive up expenses for the insurance company, and by extension, for everyone else.

One type of customer is the accidental insurance user prone to favor hospital emergency rooms for non-emergency treatments, which are readily available at a fraction of the cost from an urgent care clinic or a doctor’s office. Such customers often lack a regular doctor and account for one-third of all ER visits among Blue Cross customers insured under the Affordable Care Act.

Blue Cross is also contacting customers who have chronic health conditions – such as HIV, hepatitis, asthma and diabetes – to make sure they have primary care doctors, are taking their medications and are managing their health. For this group of customers, Blue Cross sets up free house calls and offers physical evaluations and health consultations.

The goal here is to monitor the customer’s condition and keep the customer healthy, preventing the unnecessary ER visit before it happens.

“It’s not a crazy idea,” said Austin Frakt, a Harvard University professor of public health policy. “It makes a lot of sense when you have a population that’s not using the health care system efficiently.”

Blue Cross quietly launched the customer-engagement program in July in the wake of the company’s $50.6 million loss in 2014, a financial hit largely caused by an explosion of customers on federally subsidized health insurance under the Affordable Care Act. Blue Cross has said these ACA customers tend to have more chronic health problems and require costly medications and expensive treatment.

More ACA customers

Other insurers are also scrambling to contain ACA-related costs. UnitedHealthcare, the nation’s largest health insurer, recently slashed sales commissions to zero for agents who sell ACA policies, effectively guaranteeing the agents won’t be paid. United has also signaled it might get out of the ACA line of business altogether in 2017.

Blue Cross had signed up about 400,000 ACA customers in North Carolina as of May; as the only ACA insurer that operates in all 100 North Carolina counties, Blue Cross could have more ACA customers today. As of Dec. 19, the number of consumers signed up for ACA coverage rose to 544,950 in North Carolina, divided between Blue Cross, UnitedHealthcare and policies sold by Aetna and its subsidiary, Coventry Health Care of the Carolinas.

The 2010 federal health law not only requires most Americans to have health insurance, but it also bars insurers from turning away applicants with pre-existing conditions, and it subsidizes health insurance costs for low- and middle-income people. Individual policies under the ACA generally appeal to people who don’t have health insurance through their employer or through a government program like Medicare or Medicaid.

Cost disparities

Many ACA customers had been uninsured for years and, as Blue Cross is discovering, had relied on hospital ERs for their health care. When such customers finally obtained health insurance, their bad habits didn’t automatically change. Many remained doctor-less and opted for the emergency room when they needed medical attention.

But using the ER as a default doctor carries economic consequences. Compared to the cost of an urgent clinic or a family doctor, “the ER is going to be 10 times the cost,” said John Campbell, Blue Cross’ lead medical director for utilization management.

According to Campbell, each ER visit costs Blue Cross between $1,800 and $2,200 in payments to a hospital in North Carolina.

The same visit to an urgent care clinic would typically cost Blue Cross between $150 and $200, Campbell said.

And if the patient had scheduled an appointment with the family doctor for the same treatment, Blue Cross would pay between $75 and $90.

“If you have an acute sinus infection and feel miserable,” Campbell said, “it’s the same treatment at either of these three places.”

Trouble connecting

The problem with high-cost treatments is that the costs get passed on. As a result of Blue Cross’s ACA-related expenses, the N.C. Department of Insurance approved Blue Cross for a hefty rate increase – 32.5 percent – for its ACA customers effective Jan. 1. Some customers will have to pay several hundred dollars more a month unless their federal subsidy covers their rate increase.

Blue Cross is finding that legions of these ACA customers are hard to reach, and the ones who do pick up the phone are often suspicious of the company’s motives. In the first 16 weeks of the program, Blue Cross put out 40,000 calls to customers who have used the ER for non-emergency reasons; after repeated attempts the company has been able to contact about 20,000 of these customers.

“Getting in touch with our members has been one of our obstacles – that’s been barrier No. 1,” said Susan Jackson, Blue Cross’ vice-president of health delivery redesign

This disconnectedness from social institutions is not surprising, said Tim Jost, an ACA expert and health law professor at Washington & Lee University.

“Low-income people are working and many of them have very little flexibility,” Jost said. “They don’t have sick leave, and if you don’t show up at the restaurant or the poultry plant, that’s it – they can find someone else to do your job.”

Jackson oversees a staff of two dozen Blue Cross nurses and customer service reps in the insurer’s “situation room,” the ER outreach program operated out of Blue Cross’ customer service center in Durham. This unit provides customers with information about nearby urgent care clinics and family doctors that should be the primary resource for routine care.

“We’re making hundreds of calls every day,” Jackson said. “In many cases, we’re actually helping them make the appointment.”

House calls

The other prong of the Blue Cross strategy – house calls for customers with chronic illnesses – is handled by Annapolis, Md.-based contractor Pulse8, which has deployed 70 providers in the state to arrange home health assessments.

Pulse8 CEO John Criswell said that initially only 10 percent of Blue Cross customers consented to a house call, but that figure has inched up to 15 percent more recently. “Which we think is very good for this population,” Criswell pointed out. “I just think people are busy, unavailable.”

About 10,000 Blue Cross customers on the ACA have been selected for house calls, and by year’s end Blue Cross would like a nurse to visit 2,500 of them. The house call lasts between 60 minutes and 90 minutes and includes a physical exam, treatment plan review and connection with a primary care doctor.

One of the Blue Cross customers who declined the free house call was Robert Potter, a retired editor and publisher of The Pinellas News, a St. Petersburg, Fla.-based community newspaper that closed down in 2010. Potter was incredulous that Blue Cross was encouraging him take advantage of more health care benefits under his ACA policy.

“Why would they encourage me to use more services?” Potter asked in a phone interview. “That’s more money out of their pocket.”

Potter, 63, lives in North Raleigh and has a subsidized ACA policy with Blue Cross. He is puzzled that his name was flagged for a cold call and initially suspected that Blue Cross was scheming to dump him from its rolls.

Potter has had a host of medical issues and has seen several doctors this year. He noted he is hardly an example of the out-of-touch customer flummoxed by the intricacies of health insurance.

“I’m already monitored, more than the average person,” Potter said. “Why do I need a nurse practitioner to see me when I can see my primary care doctor and they have my records right there?”