Insurance commissioner tells Blues plan to "get its act together"

Washington State Insurance Commissioner Mike Kreidler has ordered BlueCross BlueShield plan Regence to correct a long list of operational problems, many of which the Washington State Medical Assn. had been pressuring the plan to fix.

In an announcement Sept. 7, Kreidler said Regence had failed on several fronts:

• It improperly withdrew from bank accounts in more than 6,000 transactions due to a mistake in its automatic premium payment system. In 200 cases, it withdrew from accounts of nonmembers, exposing names and account numbers.
• It failed to pay some retirees' claims for several months.
• It denied claims for services that had been preapproved.
• It delayed claims payments because the company misplaced records.
• Its underwriting customer service department's voice mail instructed callers to contact a customer service office that was open only on Thursdays, but there was no answer at that number on Thursdays.

"The Regence Group needs to gets its act together," Kreidler said in a statement. "We've seen an ongoing pattern of errors and problems with Regence and its subsidiaries. Many of these problems directly harm consumers and health care providers."

Regence, based in Portland, Ore., claims more than 2.5 million members in Washington, Oregon, Idaho and Utah.

The Washington State Medical Assn. has been frustrated by the same problems that Kreidler identified, said Jennifer Hanscom, associate executive director and chief operating officer.

"The WSMA has been in ongoing communications with executive leadership at Regence BlueShield, as WSMA member physicians have reported problems in getting their insurance claims processed," she said in an email. "Most of Regence's lines of business are impacted. ... As a result, physicians' practices are not receiving their needed operating revenues. This is very concerning, and WSMA hopes Commissioner Kreidler is able to make some progress on the issue."

Kreidler said in a news release that he and his counterparts in Oregon, Utah and Idaho met with Regence CEO Mark Ganz on Sept. 1 to ask him to address the pattern of problems.

Company spokeswoman Rachelle Cunningham said in an email that some of the problems Kreidler identified happened in the past and had been resolved.

For a short time in January, when the underwriting department was overwhelmed, calls to the customer service phone line Kreidler mentioned were sent to voice mail and staff members would call back, she said. In June, staff went back to answering calls five days a week.

Cunningham said the unpaid claims Kreidler highlighted stem from a longstanding backlog of claims for enrollees who are eligible for both Medicare and the Washington State Employees' Uniform Medical Plan, but that the company has increased staffing in an attempt to address the backlog.

The bank drafts from nonmembers' accounts were refunded, Cunningham said, and the company offered to pay any bank fees incurred. In 6,671 members' cases, bank drafts scheduled for Aug. 5 were done instead on Aug. 22, but coverage was unaffected, she said. Both problems were the result of Regence's routing error, she added.

"Mistakes like this should not happen, and our employees have made this a high priority to ensure all issues related to this error have been fixed," she said.

Kreidler said the problems appear to be "systemic" rather than one-time errors. In his announcement about Regence's failures, he said the company has been hit with major fines since 2010 for violations such as failure to pay for covered contraceptives for women, wrongful denial of applications for children's insurance, and not covering mandated prostate cancer screenings.

Cunningham said Regence formed a Performance Improvement Office in June to focus on fixing the ongoing service problems. "This is our top priority," she said.