Vermont Health Connect Lapses Lead To Payment Snafus At Blue Cross

Jun 17, 2015

Technological problems at Vermont Health Connect have led to payment errors at Blue Cross Blue Shield of Vermont, and the insurance carrier is now seeking to recoup more than a half-million dollars in erroneous claims payments to health care providers across the state.

For all its complexity, the private insurance system is predicated on a pretty simple concept: buy a policy from an insurer, like Blue Cross Blue Shield of Vermont, and the company pays the bill when you visit a health care provider.

It was under this premise that Blue Cross reimbursed doctors and hospitals for about $1 billion in claims last year. As it turns out, however, an unusually high number of payments went toward the bills of patients who didn’t actually have polities with the nonprofit insurer.

“When you can’t change status of accounts in a timely and accurate fashion … you end up with people being served under the wrong plan or the wrong benefit package,” says Cory Gustafson, director of government and public relations for Blue Cross Blue Shield.

The insurer is now seeking to recoup more than $500,000 in erroneous claims payments from doctors across Vermont. Gustafson says the true-up is the result of longstanding technical glitches at Vermont Health Connect. News of the recoupment process was previously reported by VTDigger.org and WCAX.

“These are the kinds of situations where the rubber meets the road on this well-known lack of functionality that VHC has had since its inception,” Gustafson says.

"When you can't change status of accounts in a timely and accurate fashion ... you end up with people being served under the wrong plan or the wrong benefit package." - Cory Gustafson, Blue Cross Blue Shield director of government and public relations

The lack of functionality in question has to do with what’s known as “change of circumstance.” Vermont Health Connect’s inability to process those changes in a timely fashion means it can take months for Blue Cross to find out that a one-time policyholder has decided to cancel coverage. In the meantime, the insurer can end up paying out thousands of dollars in claims for which they’re no longer responsible.

The recoupment process now underway at Blue Cross centers on about 600 former accounts, but there are another 1,000 unresolved cases that could increase that amount.

Lawrence Miller, chief of health care reform for the Shumlin administration, says the state has known that the change-of-circumstance backlog would result in an unusually high number of recoupment cases.

Miller says the dollar amounts involved aren’t trivial. But in the context of a $5 billion health care system, Miller says, it’s a manageable figure. And he says the bureaucratic snafu is a temporary growing pain with a system on the mend.

"It's not going to be something that we see recurring. We have corrected the change-of-circumstance issues ... These changes that people request will be reflected on a timely basis, so there won't be a lot of going back to untangle the past." - Lawrence Miller, health care reform chief

“It’s not going to be something that we see recurring. We have corrected the change-of-circumstance issues … These changes that people request will be reflected on a timely basis, so there won’t be a lot of going back to untangle the past,” Miller says.

The payment errors being resolved right now involve former Blue Cross customers who transferred to other insurance carriers. Miller says the financial impact on affected providers should be minimal, since they'll be able to collect the outstanding claim from the patient's new insurer.

However Gustafson says the insurer is worried about the potential financial consequences on smaller providers, who may have trouble absorbing the hit. He says the insurer is working with providers to minimize hardship associated with the recoupment.

Blue Cross has also likely made erroneous payments to patients who lost coverage altogether. And the insurer says it’s probable that in those instances, they’ll seek payment from the state of Vermont, not the lapsed policyholders, since it believes fault for the situation lies squarely with Vermont Health Connect.

Miller says the administration has not decided whether it will foot those bills.

“I’m not going to prejudge a wholesale policy on all of these,” Miller says.

Miller says issues related to the change-of-circumstance functionality will be resolved entirely by October.