Restitution Due Some Blue Cross And Blue Shield Of Texas Customers

Aug. 9--AUSTIN -- Blue Cross and Blue Shield of Texas has been ordered by state regulators to pay restitution of $3.9 million to thousands of members and a $250,000 fine for underpayment of claims related to care in out-of-network hospitals and other medical facilities.

State Insurance Commissioner Mike Geeslin ordered the health insurer to make the payments over the next several months and specified that if they don't total at least $3.9 million, the balance must be paid to the state as an additional fine.

Doug Danzeiser of the Texas Department of Insurance said the underpayments date to Jan. 1, 2004, and involve thousands of Blue Cross members in Texas enrolled in Preferred Provider Organization plans.

Under those plans, members are encouraged to use hospitals and physicians in the company's preferred provider network, and they receive a higher level of benefits if they do. Members can go outside the network, but they receive lesser benefits and are financially responsible for a greater share of the costs.

Several complaints from consumers and hospitals about "unreasonably low" payments by Blue Cross for medical care in facilities not in the company's network prompted an investigation by the Texas Department of Insurance that led to the commissioner's order.

Blue Cross, the largest health insurer in Texas, denied the allegations.

Mr. Geeslin also charged that the company misrepresented to consumers which providers are in its network and thus subject to a higher level of benefits.

"TDI has received complaints that Blue Cross and Blue Shield of Texas' Web site listing of its contracted providers has listed providers as being contracted when they were not contracted," the order said. Failure to maintain an accurate listing of preferred providers is also a violation of state law.

Mr. Danzeiser said most of the affected consumers sought care in out-of-network hospitals because of medical emergencies or because the services they required were not available in regular network facilities.

"Blue Cross was paying less on these claims than what they represented to people that they would pay," said Mr. Danzeiser, deputy commissioner for regulatory matters.

Although the health insurer disputed the allegations, Mr. Danzeiser said the company has agreed to pay the fine and reimburse members who the state says were shortchanged.

Blue Cross must notify affected members of the reimbursements by mid-December. In addition, Blue Cross officials have to implement new procedures for paying claims at out-of-network facilities by the middle of August.