Efficiency of Blues' new computer setup questioned

September 25, 1992|By Ann LoLordo | Ann LoLordo,Staff Writer

The computer system that Blue Cross and Blue Shield of Maryland is heralding as the answer to its claims service problems may never do the job as envisioned, according to a consultant's assessment revealed for the first time yesterday.

The system known as CARE is behind schedule, costs millions more than originally anticipated and "is unlikely to ever be as efficient" as similar programs on the market, according to excerpts from an October 1991 study by the Blues' own consultant, Booz Allen & Hamilton Inc., that was presented to a congressional panel yesterday.

The assessment was included as part of the Senate Permanent Subcommittee on Investigations' review of the financial health and management of the Blues plan.

Blue Cross has conceded that its claims processing needs improvement. The payment of claims has been one of the most persistent complaints against Maryland's largest insurer, which has 1.4 million subscribers.

"The subcommittee has been inundated with letters and phone calls from subscribers and providers who were concerned, anxious and angry over the poor service they were receiving from Blue Cross and Blue Shield of Maryland," said Sen. Sam Nunn, D-Ga., who heads the subcommittee. "Many of them referred to the situation as a 'crisis.' The complaints ranged from claims being lost in the company's 'black hole,' to benefits' being improperly denied, to claims taking up to a year to process, to ever-increasing premium rates."

The staff report provided a very different picture of the much heralded CARE system than the one Blue Cross presented to Maryland legislators during a special hearing in Annapolis in July and in their public statements since then.

"A review of the Plan's own records and outside consulting reports show serious problems with the development, cost effectiveness and ultimate functional advantage of the CARE system," the staff report said.

Last year, the Blues were late in paying 25 percent of the $234 million worth of claims. The company has repeatedly asserted that customer service is its No. 1 priority.

The CARE project was supposed to have been up and operating by mid-1990 at a cost of $9 million, according to the Senate report. But Senate staffers say it already has cost $20 million to $26 million and will take three years and $20 million to $30 million more before it is completed.

Yesterday, the Blues defended their choice of the CARE system. Steven E. Bailey, the company vice president overseeing the CARE project, said Senate staffers relied on a year-old consultant's report, which identified problems with the system that the health insurer has already addressed. He said part of the system is already operating.

"It is going extremely well. Most of our small-group customers will be on the CARE system next week," said Mr. Bailey. "We are on budget with it. By the end of 1993, we will be on line with the CARE system."

As part of their their report, Senate staffers quoted extensively from Booz Allen reports on the CARE system including an "even more frank opinion" of the system than has previously been offered. That opinion concluded that an alternative system, known as LSPR, "could be brought on-line faster and cheaper, would be more effective" and "would produce ongoing cost savings in claims processing operations," according to the Senate report.

Mr. Bailey, however, said the other system would not meet the company's needs and that other Blues plans spent "considerably more money [on it] than we have building our CARE system."

In other testimony before the Senate panel, two providers complained about the Blues' handling of Medicare claims.

Gail Davis, the owner of a Salisbury visiting-nurse service, said the Blues did her a favor several years ago when they transferred the processing of Medicare bills submitted by her agency to a Blues plan in Philadelphia.

"To be switched back to Maryland Medicare would create a crisis for my agency," she said. "I would honestly have to consider finding alternate employment."

Dr. J. Leonard Lichtenfeld and his colleagues in Maryland haven't been as fortunate.

Dr. Lichtenfeld, a Pikesville internist and president of the Maryland Society of Internal Medicine, detailed "hassles" and a series of problems he and other internists have experienced in trying to get Medicare claims processed by the Blues. They included duplicate payments, refusal to pay interest on late claims, and lost claims.

"The frustration levels of these staff members have reached crisis proportions in large part because of the number of errors that are made on claims and the demands that the system is making to resolve those errors," Dr. Lichtenfeld testified.

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