Blue Cross and Blue Shield of North Carolina Pays $1.8M Fine for Mishandling Emergency Room Claims
Blue Cross and Blue Shield of North Carolina on Thursday paid a fine of more than $1.8 million to North Carolina for mishandling 146,000 emergency room claims since 1998, the Raleigh News & Observer reports. It was the largest fine ever levied against an insurer in North Carolina (Fisher, Raleigh News & Observer, 12/19). The insurer announced in March that it had overcharged customers, physicians and hospitals $15 million for emergency room services and would reimburse those costs plus interest (Kaiser Daily Health Policy Report, 3/7). BCBS said it unintentionally overcharged for medical services because of problems with a claims-processing system it was phasing out. The insurer said it first identified problems with its handling of emergency room payments for its PPO in the fall of 2001 but required a year to analyze the problem, which affected .05% of all claims during the period. BCBS denied that some emergency room claims in question should have been covered under a law enacted in 1998 that requires insurers to pay for emergency room visits if a "reasonable person would think that symptoms warranted quick care," the AP/Columbia State reports. Before 1998, insurers could deny payment for emergency room claims based on diagnosis (Dalesio, AP/Columbia State, 12/18). Routine state Department of Insurance inspections conducted in November 1998 revealed evidence that BCBS' HMO was not complying with the law, and the insurer paid a $49,900 fine and agreed to remedy the problem. However, some PPO claims continued to be denied. Blue Cross has reimbursed hospitals and physicians about $17.1 million, and medical providers have, in turn, reimbursed patients, according to the News & Observer. The $1.8 million state fine represents a $1,000 penalty for each day during the five-year period during which claims were improperly handled.
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Insurance Commissioner Jim Long, who signed the settlement agreement Thursday, said that during his 19 years as insurance commissioner, he has "never seen a more serious case with more widespread implications" (Raleigh News & Observer, 12/19). He added that while the state could have fined BCBS as much as $140 million after a hearing, the state opted against such a high amount because "that would have been so punitive that you would have seen it in the next rate increases going out there." BCBS spokesperson Mark Stinneford said, "We accepted the amount of the fine as being based on the amount of time it took us to correct the issue, which was unacceptable" (AP/Columbia State, 12/18).
