Md. Blues put on notice by HCFA Poor performance in paying Medicare claims is cited

January 27, 1993|By Patricia Meisol | Patricia Meisol,Staff Writer

Blue Cross and Blue Shield of Maryland, which has been paying Medicare claims by doctors for the federal government since the mid-1960s, failed to meet minimum standards for federal contractors last year and has been put on notice to improve by April 30 or risk losing its contract.

The Health Care Financing Administration (HCFA), which hires companies such as the Maryland Blues to administer Medicare payments, took the rare step of calling in Blues executives to discuss the problems 10 days ago.

At that meeting, the top officer at HCFA in charge of Medicare contracts, Carol J. Walton, outlined what amounted to the agency's third warning and corrective plan, first issued by her in a Dec. 17 letter.

"Their performance is not acceptable," said Gary Kavanagh, HCFA's deputy director of the bureau of program operations. Mr. Kavanagh, whose office evaluates 80 contractors nationwide that pay out federal medical benefits on behalf of the government agency, said the Maryland Blues received the lowest rating in the nation for 1992. The insurer "performed quite poorly over a 15-month period," he said.

Overall, the problems fell in the areas of claims processing, quality assurance and service, such as answering calls from doctors and others within 120 seconds. The insurer has also failed to meet a number of HCFA goals, which include a maximum 10 percent error rate on claims processing and a 1.5 percent maximum error rate on overpayments or underpayments.

The HCFA review covered the Blues' payment of claims for Medicare Part B, which reimburses doctors for treating Medicare participants, primarily the elderly. Medicare Part A, which covers hospital claims, was not part of the review.

If the agency's demands for improvement are not met, Mr. Kavanagh said, "one of the actions we could take is to not renew the contract for 1994." However, he said, he expected the insurer to meet HCFA's tough new demands by June -- when the contract is up for renewal.

The problems in Maryland stem from the installation of a new computer system in October 1992, the company said. Problems are common during such a change, but HCFA officials said Maryland's have continued too long.

The insurer must also collect a remaining $1 million of $8 million in Medicare money that it overpaid, according to a General Accounting Office audit.

Blue Cross announced a host of actions yesterday that the insurer said would correct the problems, and officials said they were confident they could meet HCFA's new demands for service.

In the area of claims processing, the Maryland Blues have already met HCFA requirements, the insurer said. It was on schedule for meeting other goals, such as completing paperwork on cases by the end of February, Blue Cross said.

The insurer also said it had changed top management in its Medicare operation and added employees from other divisions to work in areas of concern to HCFA.

The official in charge of the Medicare program, Linda Benedict, said Blue Cross' two contracts with Medicare bring in as much as $22 million in administrative fees, including its contract to pay hospitals.

"I am not blithely confident [the company can fix the problems], but I am concerned enough that we are pulling out all the stops to meet HCFA requirements," she said.

Maryland has been a contractor in the program since the 1960s and, as of 1991, employed more than 300 people in its Medicare division and paid out $419 million in benefits.

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