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Market Conduct Exam into Regence BlueShield Could Lead to Enforcement Actions

That exam, which was completed in 2013 by Washington’s Insurance Commissioner, began following complaints by policyholders.
April 3, 2015

Washington Insurance Commissioner Mike Kreidler is still considering enforcement options following a market conduct examination of Regence BlueShield that was completed in 2013.

“A decision is likely to be made soon,” according to spokeswoman Stephanie Marquis. “Before it’s made public, we’ll need to meet with the company.

Earlier, an executive who works for Regence told The Lund Report, “This exam clearly shows that Regence has some serious problems in the basic functions of a health plan such as being able to process claims and deal with customer complaints that it needs to come to grips with. And, it’s a shame that it took multiple issues going to the Washington Insurance Commissioner for them to conduct this study; this type of study should be done annually for all insurers in Washington state, and legislators should require each insurer to include an executive summary of their most recent market conduct study.”

At that time, Regena Frieden, director of public affairs at Cambia Health Solutions, the parent company of Regence, told The Lund Report that it’s corrected these problems and is actually exceeding its service targets in claims processing and customer service. “We are pleased to learn that our companies passed more than 92 percent of the standards in the 2011 market conduct report.” .

Regence Problems

The investigation into Regence’s practices started in January 2010 following numerous complaints by policyholders. A further look into the company’s practices revealed that Regence had been withdrawing insurance premiums from the wrong bank accounts, and, in some cases, those accounts actually belonged to people who weren’t even Regence members. Thousands of claims weren’t being paid on time, particularly for retirees who were members of the state’s Public Employees Benefit Board.

Regence had also caused distress among members who were scheduled for a surgical procedure within 72 hours, but learned the insurer had changed its mind and decided it would no longer pay for the operation

One reason the exam dragged for so long was Regence’s failure to provide information in a timely fashion. They’d often wait until the last minute and repeatedly ask for extensions. At times, the responses were given in “minimized screen size despite repeated requests to provide full screens and even examiners with generally good eyesight had to use magnifiers to work on the files creating unnecessary delays,” according to the report.

The examiners also found that operational areas inside Regence did not communicate with each other and often maintained separate systems and record keeping processes that were not compatible.

Kreidler Investigates

In September 2011, Kreidler called together the insurance commissioners from Oregon, Utah and Idaho in Sale to discuss the problems he’d seen in Washington with Mark Ganz, then the president and CEO of The Regence Group (now Cambia Health Solutions).

“The status quo clearly isn’t acceptable,” Kreidler said. “Most of these things seem to be systemic problems, rather than isolated incidents. We’ll be watching Regence more closely. We want to make certain the issues are fixed the right way. The Regence Group needs to get its act together. We’ve seen an ongoing pattern of errors and problems with Regence and its subsidiaries. Many of these problems directly harm consumers and healthcare providersThe problems identified by Kreidler at that time were:

  • Regence’s “SurePay” computer system malfunctioned on Aug. 5 resulting in more than 6,000 incorrect transactions.
  • Medical claims from tens of thousands of retirees had 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 resulted in after-the-fact denial of claims for many pre-authorized medical services.
  • There was 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. 

Diane can be reached at [email protected].