SPRINGFIELD, Ill. (NEXSTAR) — In a draft document obtained by Target 3 investigators, the head of the Illinois Department of Insurance was prepared to testify before the House Insurance Committee on Tuesday that Blue Cross Blue Shield of Illinois had “stalled and stonewalled the Department multiple times” as it withheld key data from state regulators.
A signature health care law adopted in 2017 requires insurance companies to report a “material change” to the Department of Insurance whenever it drastically reduces the number of doctors or medical providers available to the patients enrolled in an insurance plan.
When Blue Cross Blue Shield of Illinois broke up with Springfield Clinic last year, it never officially filed a “material change” with the state, even though the fallout eroded coverage for cancer patients undergoing chemotherapy or radiation, forced pregnant mothers to scramble to find new in-network obstetricians, or drastically drove up out-of-network costs for patients who decided to keep their doctor.
“Consumers must be protected from the effects of these harmful corporate disputes,” Department of Insurance Director Dana Popish Severinghaus wrote in remarks that were prepared for the Tuesday committee hearing. “We hope that both Blue Cross Blue Shield and Springfield Clinic decide to end the blame game and work towards an agreement that puts consumers first.”
A few weeks after Target 3 investigators filed a Freedom of Information Act request seeking any reports of a material change from Blue Cross Blue Shield, the Department of Insurance ordered the company to hand over the new network data detailing the changes in its network after it parted ways with Springfield Clinic.
“Blue Cross Blue Shield has argued and continues to argue that the end of the contract with Springfield Clinic did not constitute a material change under the law,” Director Popish Severinghaus wrote in her prepared remarks, signaling that the company may still contest the fine.
Last Friday, after Blue Cross finally submitted the data, the agency slapped the largest insurance company in Illinois with a $339,000 fine for failing to report the alterations in its doctor-patient ratios on time.
According to Popish Severinghaus, current laws muzzle her from even confirming that Blue Cross Blue Shield is under a targeted investigation to determine if the company has harmed consumers in the health care marketplace.
“The Department is reviewing the submitted filings for compliance with state and federal network adequacy laws,” she wrote. “However, the Department cannot provide further comment on those filings while the review is ongoing.”
She is backing a bill in the House that would loosen the confidentiality restrictions and allow the state to confirm an insurance company is under investigation.
Market conduct exams can carry massive fines for insurance companies, and can require them to retroactively reimburse and fully cover the cost of all medical bills that were adjudicated as out-of-network.
In the absence of a stage to discuss changes she’d like to see in the law, Popish Severinghaus endorsed a new legislative proposal to require insurance companies to cover any added expenses for patients forced to drive too far or wait too long to get in to see an in-network provider after their doctor was kicked out of network.
“If the wait time to see a particular provider is excessive, the insurer must pay for the patient to see an out of network provider at an in-network rate,” she said. “Current statutory requirements are also improved upon for both issuers and providers to update their provider network directories with accurate information.”
Rep. Thaddeus Jones (D-Calumet City), the chairman of the House Insurance Committee who has received more than $29,000 in campaign contributions from the insurance industry, declined to answer any questions about his decision to cancel the hearing and take Blue Cross Blue Shield off of the hot seat.
In the interim, Blue Cross Blue Shield of Illinois has started placing phone calls to affected patients, including patients with cancer, to offer verbal assurances that their exorbitant medical bills will “all be taken care of,” according to several of the patients who received phone calls this week. In order to avoid any added stress during their fight with cancer, they have asked for their names not to be published.
While customer service representatives make a direct appeal to try and smooth things over with frustrated patients, lobbyists for Blue Cross deployed an organized influence campaign to dampen any momentum to further regulate the insurance industry in the statehouse, and an executive at Blue Cross published an op-ed in the Illinois Times to promote its corporate message to the public at large. Insurance brokers who get paid commissions by Blue Cross Blue Shield are distributing the talking points published in the op-ed as they try to keep selling the plans to local employers.
“Springfield Clinic, a for-profit entity, demanded a skyrocketing 75 percent increase in rates – even though their rates are already the highest in the Springfield market and tower 60 percent more than those in the Chicago market,” Krishna Ramachandran wrote, though the insurance company still has not provided any evidence to support those claims.
After its Chief Medical Officer was denied a stage to respond to claims from Blue Cross on Tuesday, Springfield Clinic’s vice president Zach Kerker shot back in the most strongly worded statement the clinic has released yet.
“Central Illinois is not Chicago,” he said. “We have strong relationships with more than a dozen commercial insurance companies that recognize the value and quality of care that Springfield Clinic provides to our patients.”
Springfield Clinic executives have also refused to release their specific reimbursement rates for public review, claiming the terms of their contracts with Blue Cross Blue Shield include confidentiality clauses that muzzle them from discussing rates. However, in a statement, Kerker hit back at the assertion that the ‘for-profit’ clinic is the only party that stands to gain from the ongoing negotiation.
“BCBS is the only insurer that jeopardizes access to that care by significantly undervaluing our market to increase its own profits,” Kerker said. “Thankfully, there are laws in place to protect employers and patients from the very type of ‘ghost networks’ that have recently been exposed, and we applaud the Department of Insurance for working to uphold the law.”
The new bill that surfaced in the House on Wednesday would strengthen the requirements for insurance companies to provide enough doctors to see all the patients covered by an insurance plan. Current laws already include specific ratios for each specialty, and to date, after weeks of reporting, Blue Cross Blue Shield still refuses to list how many available doctors it has for specific specialties, focusing instead on the total number of doctors in the entire region.
“Even though Springfield Clinic left our network, our local members can choose from more than 3,000 valued, in-network local providers who are aligned in our mission,” Ramachandran said in his op-ed.
His vague statement directing patients to scroll through pages of thousands of doctors conveniently glossed over the glaring facts that have frustrated patients for months. Several of the most urgent specialist categories, such as radiation oncology and obstetrics, don’t have nearly enough doctors in the current Blue Cross network to satisfy the demand from cancer patients or pregnant mothers. Their doctor-patient ratios are too low, and the wait times to get in to see those other in-network doctors are too high, driving patients farther away from affordable access to health care.
The insurance company, which operates as a non-profit mutual reserve corporation and has stockpiled billions of dollars in profits while paying lavish bonuses to executives, argued that if it paid higher reimbursement rates to a few hundred doctors in Springfield, it would be forced to pass those costs on to customers and businesses in the area through higher premiums.
“Doubling the Springfield Clinic’s rates could cause local Springfield-area small businesses to see an increase of up to 30 percent in their premiums,” Ramachandran warned. “This directly hits their bottom line.”
Rep. Sue Scherer (D-Decatur), who initially called for the hearing to demand answers from the insurance company and clinic executives, said she got assurances from House Speaker Chris Welch (D-Hillside) that the committee would still happen, despite obstruction from Jones.
The House State Government Administration Committee is scheduled to host the subject matter hearing on Wednesday afternoon.
Rep. Scherer is scheduled to discuss her new proposal to regulate the insurance industry this Sunday on Capitol Connection.