The Bottom Line: Lawmakers press in and uncover new details in year-long insurance dispute
SPRINGFIELD, Ill. (WCIA) — Executives representing the state’s largest insurance company were brought to the table Tuesday night to respond to state lawmakers after our reporting revealed widespread consumer protection concerns and violations of laws. of State.
Members of the House State Government Administration Committee questioned physicians from Blue Cross Blue Shield of Illinois, Springfield Clinic and the state Department of Insurance during a nearly three-hour hearing that had already been delayed by four hours and canceled the previous week.
Representatives of Health Care Service Corporation (HCSC) – the parent company of BCBS – made two remarkable revelations late in the hearing. Administrative director Jill Wolowitz confirmed that the company which operates on a “not-for-profit basis” has racked up billions in profits, and senior vice president of the healthcare delivery division Krishna Ramachandran admitted that the Springfield Clinic had been somewhat flexible in rate negotiations.
The dispute that ultimately severed a more than 30-year relationship between the clinic and Blue Cross Blue Shield of Illinois hinges on the rate the insurer is willing to pay the company’s 450 doctors and 200 advanced practice nurses.
In press releases, Blue Cross representatives continue to say that the Springfield Clinic is asking for an “unprecedented” 75% rate increase. During the hearing, new details emerged.
“I think we’ve gone back and forth, I think I’d say they’ve gone 75%,” Ramachandran responded, adding “it’s still very high” and that it would “apply to any future expansion the clinic may have”.
Dr. Kenneth Sagins, one of two doctors who testified on behalf of the Springfield clinic, said the clinic “always likes to watch the growth…unequivocally, we don’t have any plans at this point.”
Neither party has shared documentation of these rate requests. Dr. Sagins reiterated what the clinic has been telling our reporters for weeks: “The only thing we really asked for was that BlueCross BlueShield be priced competitively in the marketplace.”
BCBSIL has been involved in thousands of negotiations beyond the one in progress for almost a year with Springfield Clinc. About 3,500 negotiations involving 100,000 suppliers last year, according to Ramachandran. Him and Wolowitz have both been sitting at the negotiating table with the Springfield Clinic.
The senior vice president told lawmakers he doesn’t believe the company has had a “major termination” with a healthcare entity like this in at least a decade.
“It’s probably been over 10 years for us. So maybe 13, I think, that’s where we landed. So really rare,” he said, adding that it is “remarkably rare” that this negotiation now takes place in front of the public.
“I think commercial contracts are vital for us,” said Dr Sagins. “Unfortunately, we don’t get some of the benefits of being a non-profit organization and some of the grants that come with it.
Blue Cross and Blue Shield Association executives were forced to comment on the company’s tax-exempt status, which the Chicago-based company has enjoyed since 1958.
The mutual legal reserve company has hoarded $20 billion as of 2021 while operating on “a not-for-profit basis.” Wolowitz revealed when pressed. The chief executive blamed a need for additional supplies during the pandemic.
That profit margin is double the $10.29 billion that HCSC had accrued by the end of 2013, according to court records from 2016. And that doesn’t include big bonuses paid to senior executives.
“So why are you tax exempt and still holding that 20 billion in reserves?” Rep. Sue Scherer ponders.
Democrat Decatur, who pushed for that hearing, said it got personal.
“I’m only here for one reason, and that’s to help my constituents. They literally die,” she said tearfully as the hearing began.
Scherer was one of many lawmakers to share first-hand and second-hand accounts of bad experiences with Blue Cross insurance. Many in the room were a degree or two of separation from bloated medical bills and the dead-end search for a new doctor at a time when time is all.
The two sides continue to dispute the number of patients affected. This number is integral to the Department of Insurance’s ability to determine whether Blue Cross customers have an adequate network of providers to choose from under state law, which is based on a patient-to-provider ratio.
Blue Cross executives continued to claim that 55,000 members were affected when they kicked providers of these Springfield Clinic patients out of the network, counting only insured patients who received care from the clinic at the time. course of the last 18 months. This total does not include paying customers who had been healthy for a year and a half, or others who care delayed in the last two years of the COVID-19 pandemic.
Doctors at the Springfield Clinic said 20-25% of their patients, or about 110,000 of them, are Blue Cross customers affected by the split. Dr Sagins said that number could not be less than more than a few thousand.
No matter how you break it down, BCBSIL didn’t have enough of several doctor types in its online directory when Target 3 investigators called it, finding an apparent violation of the Adequacy and Transparency Act of 2017. of the state network.
One of the biggest discrepancies concerned the directory of obstetricians. We did not find any available to take on new patients in the Springfield area within the 15 days required by state law.
“We walk our patients through some of the happiest times of their lives when we deliver their babies. And we walk our patients through some of the most devastating times in their lives, when we give them a diagnosis of breast cancer,” said Cheryl Brown, obstetrician-gynecologist at Springfield Clinic.
“And we have no identifiable reason as to why this happened.”
Dr. Brown started calling herself via the online directory since we started reporting.
“My patients need more than that,” she said. Scrolling through the list, she saw “a group of names that are completely unknown to me. And so I look at the address. And I realize this is not a doctor’s office. These doctors do not exist.
Brown was shocked to find a household name on the OB/GYNS list, a doctor who retired in her second year of residency 21 years ago.
Ramachandran said Blue Cross relies on vendor feedback to update its own network, adding that “many of them are compliant.”
Brown confirmed our investigation when she found several vendors listed in and around Springfield that no one had heard of. Target 3 investigators uncovered at least three.
“We all know the OB/GYNs from central Illinois, it’s not a big community. Agreed. These names are not real. They don’t exist, but they’re on the list,” Brown said.
“I think it’s everyone’s responsibility,” Dr Sagins said. “We have a group of people who are just getting accredited.”
“We’re always 97-100% correct every time we audit how well we’re maintaining this,” he added. “I think, you know, again, the responsibility is also on the insurance company, also to make sure that, or whatever department, to make sure it stays tight.”
Insurance Department Director Dana Popish Severinghaus, the first to answer lawmakers’ questions, confirmed the department will file emergency rules by the end of the week to tighten regulations for insurance companies statewide.
Committee chair Rep. Stephanie Kifowit (D-Aurora) questioned whether Popish Severinghaus’ $339,000 fine against BCBSIL was sufficient. The state fined the company $1,000 a day for each day that Blue Cross failed to report a “material change” to its network.
The DOI director confirmed that the fine Blue Cross paid on Monday will be deposited in the state’s General Revenue Fund. This is the first-ever state fine imposed on an insurer for failing to report a material change.
The Georgia State Insurance and Fire Safety Commissioner fined Blue Cross Blue Shield $5 million on Tuesday for some of the same violations we discovered weeks ago. A report by WRBL cites “a number of serious problems” including improper complaint handling practices, failure to respond to consumer complaints in a timely manner and inaccurate supplier directories.
It is unknown if Blue Cross Blue Shield of Illinois will be penalized for dead-end directories that we first revealed a few weeks ago. Popish Severinghaus said they were reviewing a newly filed directory by the company and that she expects the department to report its own suitability findings within weeks. “Retroactive corrective actions” are on the table “if necessary, including adjusting past claims,” the manager said.
“This is a growing cancer that we need to find solutions to,” Rep. Scherer said in closing her questions for the Department of Insurance.
The state has received 19 complaints related to this dispute, Popish said Severinghaus. “It’s not necessarily an indication that there aren’t more, I think, anecdotally, across the board. Representative Scherer has heard a lot more complaints than that.”