Blue Cross’s ACA problems still under review, says state regulator

Blue Cross Blue Shield opened retail outlets to help people sign up for health insurance, but its technology problems led to multiple problems that the N.C. Department of Insurance is investigating.
Blue Cross Blue Shield opened retail outlets to help people sign up for health insurance, but its technology problems led to multiple problems that the N.C. Department of Insurance is investigating.

The N.C. Department of Insurance broke its silence Monday on a long-running investigation of Blue Cross and Blue Shield, saying the matter will require “further examination” because Blue Cross disputes the agency’s findings of wrongdoing.

The insurance department launched an investigation of Chapel Hill-based Blue Cross, the state’s largest health insurer, in February as thousands of Blue Cross customers were complaining that they were double-billed, dropped from coverage or assigned to the wrong health plans.

At the time, Insurance Commissioner Wayne Goodwin had predicted his agency would fine Blue Cross in the millions of dollars. Since then, Goodwin has declined to provide updates. And because the investigation is confidential under North Carolina law, the details of the insurance department’s initial findings – and the nature of Blue Cross’s objections – have not been made public.

On Monday, in response to queries from The News & Observer, the agency issued a short statement: “The North Carolina Department of Insurance determined further examination of Blue Cross Blue Shield is necessary,” the agency said in the statement. “The initial examination report was delivered to BCBS on May 31, 2016. Interactions with Blue Cross Blue Shield have been ongoing but disagreements on the findings persist.”

State law allows an insurer and state investigators to exchange information and hold internal agency hearings if there’s a dispute over the agency’s findings. The lack of public resolution in the matter means that Blue Cross has challenged some of the agency’s findings.

“There are areas where we agree and areas where we disagree,” according to a statement from Blue Cross. “This kind of dialogue is all part of the normal process. We are working with DOI to reach a resolution to this investigation and move forward.”

Blue Cross has repeatedly issued public apologies, but has carefully avoided implicating itself. In an April memo to employees, Blue Cross general counsel N. King Prather laid out the company’s position: “Our current challenges stem from platform, technology and process issues, not actions that could be deemed illegal or unethical.”

Through August of this year, the N.C. Department of Insurance department has received 3,444 complaints, mostly relating to Blue Cross’s technology problems. The complaints include 294 from medical providers, many who said they hadn’t been paid – in some cases for several months – by Blue Cross. In August alone, the agency received 101 complaints relating to Blue Cross, including four from medical providers, and many of those concern the issues under investigation.

Blue Cross’s enrollment and billing problems surfaced in January, at the beginning of the new coverage year for the Affordable Care Act and other individual policies that customers buy directly from the company. The problems affected people on individual policies and were not known to affect Blue Cross customers insured through employers, through Medicare or through the North Carolina state government health plan, which Blue Cross administers.

Blue Cross blamed malfunctioning software for the disruptions, which left thousands of customers stranded without coverage, prompting the Department of Insurance to intervene for customers in dire medical situations.

At least two Blue Cross executives resigned, including Alan Hughes, the company’s former chief operating officer who was in charge of technology implementation.

The Department of Insurance typically issues between a half-dozen and a dozen investigation reports annually of life and health insurance companies. The department’s largest fine to date was $1.825 million, levied against Blue Cross in 2003, for failing to provide coverage for emergency care.

John Murawski: 919-829-8932, @johnmurawski