Md. fines CareFirst $400,000 for claims infractions

Penalties unrelated to pending sale

February 26, 2003|By M. William Salganik | M. William Salganik,SUN STAFF

State Insurance Commissioner Steven B. Larsen announced $400,000 in penalties yesterday against CareFirst BlueCross BlueShield for late claims payments, improper claims denials and other violations of insurance rules.

The penalties stem from "market conduct examinations" and are unrelated to CareFirst's pending application to sell itself to WellPoint Health Systems Inc. for $1.37 billion. Larsen is expected to rule on the application soon.

The examinations are performed by the Maryland Insurance Administration (MIA), both routinely and in response to complaints.

Over the past three years, Larsen has assessed more than $3 million in penalties against health insurers for claims problems.

A complaint from MedChi, the state medical society, touched off one of the reviews of CareFirst that produced the penalties announced yesterday.

MedChi's complaint had to do with doctors who provided two different services in one office visit. An example would be a dermatologist who sees a patient for eczema and, at the same time, finds and removes a mole, said T. Michael Preston, MedChi's executive director.

When CareFirst got the double claim, its system denied the claim for the second service. CareFirst has been ordered to reprocess 20,844 claims; the dollar amount involved is not yet computed.

"Doctors often feel CareFirst plays games with its payment rules," Preston said.

In a written statement, CareFirst said: "All of the issues raised by the MIA examinations have been corrected."

The insurer said some of the problems stemmed from programming problems and others from its merger of several different health management organizations into the regional HMO called BlueChoice. CareFirst officials declined further comment beyond the statement.

Other problems named in the MIA reports:

CareFirst was denying payments for rapid strep-throat tests given in doctors' offices because they were not done at an approved lab. Strep-throat tests once were done by labs, but when a quick test became available for doctor use, "their claims system did not keep up with the technology," said P. Todd Cioni, associate commissioner for compliance and enforcement.

CareFirst changed its system and reprocessed 3,452 claims, paying $51,598. Cioni said the review of strep-throat tests came from a complaint by a single consumer.

BlueChoice and its predecessor, CapitalCare, paid 52 percent of its claims late in 2001 and 2002. State law requires payment within 30 days.

CareFirst's Medicare supplemental policies that paid for prescription coverage improperly required authorization for some medications. Cioni said all the patients involved had received payments to which they were entitled, but had undergone unnecessary hassles in having their prescriptions reviewed.

Advance PCS, the company that acts as a middleman in reviewing and paying prescription claims for CareFirst, was not properly registered with the state as a "review agent." Cioni said the issue was one of consumer protection -- making sure coverage decisions are made by qualified persons.

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