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Insurance Department Exam Finds Capital Blue Cross Violations

by Pennsylvania Insurance Department

Insurance Department Exam Finds Capital Blue Cross Violations

Acting Insurance Commissioner Michael Humphreys Wednesday announced the results from a comprehensive Affordable Care Act market conduct examination that the Pennsylvania Insurance Department (PID) conducted on the practices and procedures of Capital Blue Cross.

“Market conduct examinations are a way for the department to ensure that consumers are being afforded the rights and protections guaranteed to them by Pennsylvania law,” said Humphreys. “Our top priority will always be protecting consumers, and we aim to hold businesses to the high standards that their customers deserve. The results of this exam will see consumers receiving restitution for claims that were incorrectly processed, as well as applicable interest.”

“Capital Blue Cross has been cooperative in its response to the exam, and we expect we will see continued improvement when re-examinations occur,” Humphreys added.

Capital Blue Cross statement on PID Market Conduct Exam: “Capital Blue Cross is pleased that the Pennsylvania Insurance Department’s recent comprehensive Affordable Care Act market conduct examination identified no violations in most areas reviewed and imposed the lowest penalty reported to date of any insurer undergoing such an examination.

Capital continually evaluates its operations and procedures to ensure it is meeting the needs of our members, and we appreciate the department’s thorough and thoughtful review of our efforts. Capital already has taken action to address the issues noted in this exam, which covered a 15-month period in 2017 and 2018.

It is important to our leaders and employees – and vital to our mission – that Capital act with integrity and in compliance with all regulatory requirements, while continually improving our members’ access to high-quality, affordable healthcare.”

The Insurance Department is charged with upholding fair business practice standards for consumers, companies, and insurance professionals. This work involves researching and resolving complaints from consumers, investigating allegations of misconduct by insurance companies, agents, brokers, and others, and ensuring that practicing professionals are properly licensed.

The Capital Blue Cross examination, which covers the period from January 1, 2017, to March 31, 2018, identified concerns with claims processing, including claims being denied for lack of prior authorization when prior authorization had already been obtained, and a coordination of benefits issue that has since been updated. The examination also reported additional Unfair Insurance Practices Act violations relating to unclear communications with members. The exam also found mental health parity violations, as Quantitative Treatment Limitations (QTLs) were not applied correctly in some plans.

The department has ordered Capital Blue Cross to take corrective action to address the violations. Claims that were incorrectly processed must be reprocessed and accurately paid with applicable interest, including claims that were denied based on non-compliant session limits. The company must also adjust internal controls to address accuracy and clarity in its communications with members, specifically regarding its explanation of benefits, certificate of coverage, and schedule of benefits. Capital Blue Cross is also ordered to pay an $85,000 penalty.

To date, approximately 60,000 Pennsylvanian consumers have received $5.87 million in restitution as a result of the department’s ACA market conduct examinations of other major health insurers.

The Insurance Department will continue to monitor and verify that Capital Blue Cross’s corrective actions have taken place, including through quarterly reporting, as well as through a reexamination process in the future.

A full copy of the Capital Blue Cross examination report may be found here.

Consumers who believe their insurance plans are not in compliance with commonwealth laws or regulations, or who have questions about the benefits to which they are entitled, are urged to contact the Insurance Department’s Bureau of Consumer Services online or at 1-877-881-6388.