Citing “numerous” complaints from medical providers whom Blue Cross & Blue Shield of Rhode Island allegedly owes “substantial” amounts of money, Attorney General Patrick C. Lynch is probing the insurer’s contract with claims-processing vendor Perot Systems Corp.
Blue Cross, which in 2003 processed $1.7 billion in claims, hired the Texas company in June 2003 to handle its technology and business process operations. Valued at $570 million over 10 years, the deal was meant to modernize the insurer’s systems and improve customer service.
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Up to now, every indication from Blue Cross was that Perot was doing a fine job. But after Lynch claimed otherwise, the company acknowledged that there have been problems – serious enough, in fact, that Blue Cross imposed a $2.5 million penalty on the vendor.
“Yes, there is a problem with some claims being processed on time,” Blue Cross spokesman Scott A. Fraser said in an interview. “It’s something that we’ve been working with Perot Systems on.” But Fraser added that the problem is “short-term” and not widespread.
“In any outsourcing situation, especially when you’re changing from one massive system to another, you’re going to have some of these problems,” he said. In the last six months of 2004, Perot processed more than 4.3 million claims, Fraser said, and 98 percent were paid within 30 days.
“That leaves 2 percent that were not,” he said, but that’s still “a large number, especially if you’re on the waiting end.” Blue Cross is working to get those claims paid “as fast as we can,” he said, and Perot is “committed to giving us the best service they can.”
It’s unclear how many medical providers are affected by the problem, or how much they’re owed. Lynch issued a news release saying “some” providers are owed more than $100,000 for more than 120 days, and at least one has more than $400,000 in overdue claims. But neither he nor Blue Cross had global figures, and Fraser said he doubted “a lot” of doctors were owed large sums.
Newell Warde, executive director of the Rhode Island Medical Society, said it’s not something the group is hearing about from physician practices. But Peter Erickson, a psychologist and member of the Rhode Island Psychological Association, said he has heard of some problems, especially with claims filed on paper, rather than electronically. Claims for patients with out-of-state coverage are known to be “problematic,” he said, and “tend to take a lot longer.”
That’s where Fraser said “the bulk” of the delays have been: with patients covered by an out-of-state Blue plan (say, Blue Cross & Blue Shield of Massachusetts) but treated in Rhode Island. The Blues cover one another’s claims, then settle up amongst themselves, but the process doesn’t always work promptly.
Lynch acknowledged that payment delays are not just a problem with Blue Cross, but occur with other insurers as well. That’s why last summer, he said, he asked the Department of Business Regulation to look into the matter.
He’s also urged Assistant Attorney General Genevieve M. Martin, who acts as the consumer advocate in insurance matters, to keep tabs on the Blue Cross situation in particular. He went public, he said, because Blue Cross was “less than forthright” when Martin first inquired about Perot’s performance.
Lynch has given Blue Cross two weeks – until this Thursday – to give him copies of “all documents” related to Blue Cross’ decision to hire Perot, to the implementation of the contract, and to Perot’s “failure to process claims in a timely fashion.”
