Groups testify against Blues Poor service claimed in opposing D.C., Md. consolidation

Regulation

November 06, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

WASHINGTON -- Two consumer groups yesterday asked regulators to block a business consolidation between the Maryland and District of Columbia Blue Cross plans because the insurers give such poor service.

The groups testified at the last day of a hearing by the D.C. commissioner of insurance and securities regulation. The two Blue Cross plans propose to create a nonprofit holding company that would control both their boards. The plans would combine some products and administrative functions.

Insurance regulators in both Maryland and the district need to approve the consolidation plan before it can go forward. With the conclusion of the hearing yesterday, D.C. Interim Insurance Commissioner Patrick Kelly allowed an additional two weeks for the public to submit written comment, and he said he would decide within 30 days after that.

Such regulatory reviews provide an ideal opportunity for consumers to get complaints addressed, said A. G. Newmyer 3rd, director of the Fair Care Foundation, a new national consumer group based in Washington. "When insurers treat customers shabbily," Newmyer said, "then consumer groups finally have a chance to get regulators to act like Blue Cross claims adjusters and just say no."

Joining him in urging rejection of the consolidation was J. Robert Hunter, director of the Consumer Federation of America, a coalition of more than 250 groups including Consumers Union and the American Association of Retired Persons.

Hunter, a former insurance commissioner in Texas, said, "The current policyholder service level of both plans is questionable." Pointing to a consumer survey by the D.C. Blue Cross plan, he said the plan, "says it's doing great because only 11 percent [of subscribers] would leave if they had the opportunity. I don't think that's great; I think that's pathetic."

Before even considering a consolidation, Hunter continued, regulators should conduct a "market conduct survey" of current service levels and should require the plans to adopt a "consumer bill of rights," spelling out such areas as how customers could appeal if claims are denied.

Hunter said there are a number of efforts to develop such a "bill of rights," including one expected this month from a presidential commission.

Also testifying at the hearing, Dr. David Robinson, a physician in private practice in Washington, said the Blue Cross plans speak of "seamless care and seamless service" but actually offer "ceaseless hassles."

Immediately after the hearings, representatives of both Blue Cross plans rushed to defend their companies' service records.

Ann T. Gallant, vice president for corporate communications at Blue Cross Blue Shield of Maryland, said her company covers 41 percent of insured Marylanders, but generates only 16 percent of the complaints to the Maryland Insurance Administration.

Albert B. Wann, Gallant's counterpart with Blue Cross Blue Shield of the National Capital Area, said his company ranked 65th out of 69 Blue Cross plans nationally on service scores as recently as 1994, but this year had brought its ranking up to 11th.

In other testimony, John N. Ellison, a lawyer for Fair Care, said the so-called business combination agreement between the Blue Cross plans was a merger, and claims to the contrary were "nonsense." That means, he and Newmyer said, that the value of the assets of the D.C. Blue Cross plan should be placed in a public foundation.

Other consumer witnesses said the value of the assets would need to be turned over if the Blue Cross plan switched to for-profit status.

The Maryland Insurance Administration has scheduled its own hearing on the Blues' combination for 9: 30 a.m. Monday at 211 E. Madison St. in Baltimore.

Pub Date: 11/06/97

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