Regence BlueShield Targeted by Washington Insurance Commissioner

Regence has until Jan. 9 to show how it’s going to rectify problems identified by a recent market conduct exam that concluded the insurer had not paid claims on time or handled grievances appropriately.

The time clock is ticking for Regence BlueShield to respond to the major problems identified in a market conduct exam conducted by the Washington Insurance Commissioner’s office. 

That exam, which took two years to complete, called into question Regence’s ability to pay claims, handle grievances, accept applications in time and coordinate benefits for people who have more than one insurance policy. Several of these problems resulted from the failure of its Facets system, which handles claims. The exam came up with similar findings for Asuris Northwest Health, a Regence affiliate, which also sells insurance policies in Washington state.

Regence has until Jan, 9 to explain – in detail – how these problems have been resolved and give state officials assurances they will not reoccur.

“We will continue to monitor Regence’s progress,” said Kara Klotz, with the commissioner’s public affairs office.

Depending on the severity of these problems, Regence could face financial or other penalties.

“This is something that’s looked at on an individual case by case basis, and we’re not ready to comment at this time” [about Regence], according to Stephanie Marquis, public affairs spokesperson for the commissioner’s office.

Marquis was unwilling to say anything about the seriousness of the problems identified in the report. “We do not have a comment at this time, and we’ll let the exam speak for itself.”

Before the market conduct exam was made public, on Oct. 11, Regence had an opportunity to review the document and did offer several technical clarifications. They also asked the commissioner’s office to modify the report before releasing it publicly -- based on its clarifications – but didn’t get its way. The insurance commissioner stood behind his 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,” an executive who works for Regence in Oregon told The Lund Report. “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.”

Defending the company, Regena Frieden 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,” Frieden handles public relations for Cambia Health Solutions, the parent company of the Regence plans.

Another Shake Up at Regence

Meanwhile, there’s been another shake up inside Regence BlueShield. Leonard Hagen, director of regulatory affairs, whose job it was to respond to the problems identified by the commissioner’s office, has left the company to pursue a career in estate planning.

And Jonathan Hensley, who was tossed out as Regence’s president by Jared Short has been replaced by Don Antonucci, who’s left his position as president of Regence in Oregon, and now is responsible for dealing with the insurance commissioner’s findings.

Angela Dowling has stepped into Antonucci’s shoes, having joined Regence earlier as vice president of sales.

When asked for a comment about the departure of Hagen, Regence put its own spin on the leadership change. “Len’s decision to leave is unrelated to the market conduct exam report or our response to the Washington OIC on these issues,” according to Frieden.

With more than a million members, Regence BlueShield is Washington’s largest insurance company.

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.

It’s unknown whether any other insurance companies in Washington have been targeted for a market conduct exam since such activities are considered confidential until a report has been released, according to Marquis. The last such exam conducted on Regence occurred in 2004.

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 providers.” Since then, Regence’s holding company has changed its name to Cambia Health Solutions.

The problems identified by Kreidler at that time were:

  • 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 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.

Dlane can be reached at [email protected]

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Comments

Since the late 1990s, the insurance industry overwhelmingly relied on Ingenix, a subsidiary of UnitedHealth Group, for “data benchmarking” products to estimate reimbursements for out-of-network charges. Ingenix (rebranded as OptumInsight in April, 2011) and insurance companies Aetna, Cigna and Blue Cross were accused of manipulating data they used to price care. “Usual, customary and reasonable” fees for services were under-reimbursed, shortchanging the nation’s patients by hundreds of millions of dollars. Settled in 2009, the insurance companies had to underwrite a new nonprofit database, but did not obligate them to use it. By the time the database was finally up and running in 2011, the same companies had rapidly shifted to another calculation method--which pays even less! http://www.nytimes.com/2012/04/24/nyregion/health-insurers-switch-baseli... Providers aren't always able to fully collect from patients, strapped with out-of-pocket "balance billing." Balance billing, the difference between what the patient's health insurance chooses to reimburse and what the provider chooses to charge, does not count toward the out-of-pocket maximum of $6,350 for an individual plan and $12,700 for a family plan sold on Cover Oregon. The cheapest plans (Medicaid, bronze and silver) are the most likely to have an "ultra-narrow" network. “About two-thirds of hospital networks on the exchanges are narrow or ultra-narrow,” said Paul Mango, a director at the consulting firm McKinsey & Co. In consideration of public access to data on Oregon's All Payer All Claims (APAC) database, "Alison Goldwater, the vice president of provider services at Regence, told the policy board that information should remain confidential. 'Publicly disclosing private contract rates will drive rates higher.' " http://www.thelundreport.org/resource/regence_bluecross_blueshield_objec... Milliman Inc., a private actuarial and consulting firm with close ties to the insurance industry, collects, de-identifies, encrypts and analyzes our personal health metadata in Oregon's APAC. Milliman Inc. uses use Symmetry® "episode risk group software" from OptumInsight on this data. In April 2011, Ingenix rebranded as OptumInsight. Governor Kitzhaber has asked the Oregon Health Policy Board to come up with APAC recommendations that could come before the February 2014 legislative session. Balance billing should be included in the APAC so broader consumer protections against unfair balance billing practices can be created. Also, the OHPB should scrutinize whether warehousing APAC data at Milliman Inc. poses any conflicts of interest and whether it conforms to section 2794 of the Public Health Service (PHS) Act, which requires that Data Centers must be located at academic or other non-profit institutions.

Only a leadership problem at the very top can account for so many systemic issues in multiple areas, involving multiple senior executives and departments in several large business units; and with so many scapegoats and "voluntary departures." And so much spin-doctoring around real issues. Only the Cambia board of directors can deal with that leadership problem, and it is past time they did. Very recently, TIME Magazine ran a long interview with Carl Icahn, the famous billionaire "shareholder activist". Among his pithy observations about American companies was a concise analysis of too many CEOs and boards of directors he has fought with. That the boards are collected cronies of the CEOs, who are just enough smarter (his words were more like "less dumb" as I recall) than their boards to keep their jobs---boards who aren't about to fire the CEO who in most cases selected them and compensates them. Cambia's CEO has had a decade to select his board replacements. Are they too beholden to act?

Oh good heavens, EVERYONE who has worked there during the past decade knows that Mark Ganz is the problem. He reached the top through a series of lucky happenstances - beginning as a lawyer for Pierce County Medical, Mark was simply the least controversial and least objectionable candidate readily available for open positions. He surrounds himself with advisors he meets in airport parking garages (Mohan) and toadies that feed his ego. These unexpected 'voluntary departures" are filled by moving pawns from one position to another within the company - this allows continuation of the Mark Ganz cult of personality. Outside searches fail to find acceptable candidates willing to participate in the charade - or when they do, these people get out fast (see the revolving roster of medical directors, for instance). I know Len. I know Jonathan. In fact, I know a number of the key players who no longer work at Regence. The carefully worded departure memos can not hide the incompetence that pervades Regence.