As Montana's Blue Cross company evolves under a new corporate parent, state regulators are penalizing it for some alleged past misdeeds uncovered by an audit.
Montana's Insurance Commissioner Monica Lindeen has leveled what she called a "historic" fine against Blue Cross and Blue Shield of Montana in the amount of $250,000.
The result of an audit covering 2006 to 2010, the fine is "the largest of its kind for a market conduct exam in Montana history," Lindeen said.
The company, acquired by Health Care Service Corporation in July 2013 for $40 million, is now known as Caring for Montanans, Inc.
Among the problems identified in the audit that led to the fine were a range of violations of administrative, claims processing and consumer rights requirements.
The audit, performed by the firm Risk & Regulatory Consulting, found six instances of untimely claims processing, three instances of "inadequate, incomplete, or incorrect" explanation of benefits, and two instances of "a response letter that referenced incorrect information regarding the effective dates or date of service."
The audit also found ten claims that were denied incorrectly and never reprocessed, two claims that were incorrectly denied as having exceeded the calendar year's maximum benefit, and one claim that was incorrectly reimbursed at the non-network co-insurance rate of 40 percent instead of the in-network rate of 50 percent.
"This company failed to follow the rules and consumers were hurt as a result," said Lindeen, a former state representative and secretary-treasurer of the National Association of Insurance Commissioners, in a media release.
Blue Cross and Blue Shield of Montana transitioned to a managed care insurer in the 1990s, was licensed to sell Medicare Advantage plans in 2006 and also served as the state's high risk pool carrier, ultimately counting some 370,000 customers, including 140,000 seniors on Medicare.
HCSC's Montana division president, Michael Frank, came with the acquisition, after spending three years as Blue Cross and Blue Shield of Montana's CEO. The company is one of three insurers vying for Montana's federally-run state insurance exchange, along with Montana Health Co-Op and PacificSource Health Plans.