Blue Cross penalized for denying Minnesota patient's claim

Jan. 07--Blue Cross and Blue Shield of Minnesota paid a $20,000 penalty last year after regulators found the insurer denied a patient's claim for services, even though the medication in question had been deemed medically necessary by an external review committee.

Mike Rothman, the commissioner of the state's Commerce Department, called Blue Cross's action in the case a "blatant violation" of consumer protection laws that give consumers a right to a binding external review when insurers deny claims for medical care.

A spokesman for Eagan-based Blue Cross said the problem stemmed from a communication breakdown with an outside vendor.

"I will not tolerate these kinds of terribly troubling, unfair claims practices against consumers," Rothman said in an interview. "It is unprecedented that we would have found a violation of this nature, and issued a consent order with this penalty."

Under state and federal law, consumers can appeal an insurance company's denial of coverage for medical treatment. Depending on the type of health insurance plan, independent external reviews are arranged by the Commerce Department.

Documents from Commerce provided to the Star Tribune under a data request indicate the dispute involved a patient's access to a prescription medication, but specific information about the drug and patient's name were redacted.

Scott Keefer, vice president of public affairs and communications at Blue Cross, said he was limited in what he could say about the case due to privacy laws. But the insurer was concerned the drug was being prescribed in a way that goes beyond its government-approved label, Keefer said, adding that there's growing concern in general about such "off-label" uses.

Ultimately, the insurer agreed with the prescription, he said, but failed in communicating the decision to an outside company that manages pharmaceutical benefits for Blue Cross.

"There was a breakdown in communication," Keefer said in an interview. "I acknowledge we could have done a better job in managing the follow-up."

Eagan-based Blue Cross is one of the state's largest health insurers. During 2014, its parent company reported a net operating loss of $8.2 million on revenue of $10.1 billion.

Between 2011 and October 2015, consumers appealed more than 400 coverage decisions by Blue Cross, according to summary figures provided by Commerce. External reviewers overturned about 31 percent of the decisions, although the ratio during the first 10 months of 2015 was higher at about 36 percent.

Rothman said he was concerned by the track record at Blue Cross because "it's trending in an inappropriate way against consumers."

"If you compare the percentage of appeals overturned over these years, Blue Cross Blue Shield has a higher percentage of appeals overturned than the other companies, in general," he said. "There might be years that that's not true, but generally that's what we're seeing.

"We've also seen within the last year that that's picked up a bit," Rothman added.

Keefer said he wasn't sure about numbers on external appeals at other health insurers, so he couldn't make comparisons. In a statement Wednesday, Blue Cross officials said they believe the company's level of overturned appeals has been "fairly consistent in recent years."

"We try to make sure that we're doing right by our members, and that they're getting the care that they're entitled to," Keefer said. "The appeals process for us ... often times it's about getting the right information so that patient safety or other concerns can be addressed."

The numbers released by Commerce don't provide a full picture of all health insurance appeals involving Blue Cross and its competitors. Commerce handles appeals for the "fully-insured market," meaning individual and group plans that pay insurance companies to take the financial risk with their coverage.

But appeals involving HMO coverage are handled by the Minnesota Department of Health, and agencies other than Commerce are involved with appeals of coverage decisions in Medicare, Medicaid and "self-funded" employer plans, such as the insurance provided by many large companies that operate in multiple states.

Twitter: @chrissnowbeck

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