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The home for VPR's coverage of health and health industry issues affecting the state of Vermont.

State To Pay Blue Cross Blue Shield $1.6M After Exchange Errors

Officials said Friday the state will pay Blue Cross Blue Shield of Vermont $1.6 million to cover Vermont Health Connect premiums the insurer did not receive and claims it paid out incorrectly because of technology problems during 2014.

The state and BCBS had been undergoing a lengthy reconciliation process to balance accounts and determine how much exposure the company had. Lawrence Miller, Gov. Peter Shumlin’s chief of health care reform, said the state and BCBS have completed that work and signed an agreement Thursday, settling on $1.6 million.

“This is sort of an all-in summary,” Miller said.

The state’s online health insurance marketplace lacked a key function — automated change of circumstance — when it launched in October 2013. That meant that workers and to manually process customers’ requested changes to their personal information such as a new address or family member, which caused a backlog that reached as high as 14,000.

As a result, the insurance carriers in many cases were not told by the state that they should either stop billing customers for terminated coverage or not pay claims for coverage that had already been terminated.

Neither the state nor BCBS could determine exactly how much the company was owed until the reconciliation process was complete and financial records could be balanced.

Cory Gustafson, spokesman for BCBS, said the $1.6 million payment agreement is a combination of unpaid premiums and “unrecoverable claims” that were paid out under the wrong circumstances.

Gustafson said BCBS was eager to close out the 2014 book of business so it could begin to focus on 2015 plans.

“There was an extensive reconciliation process and it got to a certain point where we needed to reach an agreement on the numbers and we did,” he said. “We basically wanted to wrap up 2014 and focus on this year and get a more regular reconciliation process in place.”

Still, Gustafson said he could not say that the settlement amount is “100 percent accurate.”

“This is really hard work done in a pretty tough situation on both sides,” he said. “They’ve always said, ‘We want to take responsibility for our obligations, and we always said, ‘We owe it to our members to pursue the dollars that are out there. It’s our members’ money.’”

It’s unclear where the funds will come from within the state’s budget. Miller said officials will first look to cover within the existing budget of the Department of Vermont Health Access, which oversees the operations of the exchange.

“I don’t know if they carried anything for it or not. I would think they did not, but I don’t know,” he said. “With all these things we first try to manage within the existing budget.”

The Shumlin administration could look for additional funds through the annual budget adjustment process in January if it cannot be covered by existing appropriations, but Miller said it's not clear at this point if that's needed.

“By no means is it certain that any additional appropriation will be necessary,” Miller said.

The agreement closes out discrepancies for 2014 insurance plans on the exchange, but the two sides will need to engage in a similar reconciliation process for 2015 plans.

Miller said it is “too soon to have any idea” how much the state might owe BCBS for 2015 plans.

“We’ll need to go through the same reconciliation process for 2015," he said. "I think its illuminating to look at this where originally there were reports in the press that it was going to be a $20 million problem, then further reconciliation got that down to a $5 million problem … to finally where it’s a $1.6 million problem."

Miller said there appears to be fewer such billing discrepancies among the 2015 insurance plans.

The state recently upgraded the exchange to implement the automated change of circumstance function, allowing staff to process requested changes much faster. That will allow the state and BCBS to close out the 2015 book of business sooner, according to Miller.

“We’re going to have it done substantially sooner. That’s the plus,” he said. “By the time we get the 2015 backlog eliminated … then we’ll be able to reconcile all of that without waiting until year end.”

Gustafson said BCBS is now shifting its focus to 2015 plans.

“We are confident that both sides will engage in 2015 where necessary. We’re hoping that the better, improved change of circumstance process will produce less noise … and therefore a better process,” he said. “We fully expect we’ll be in a situation where we have to have these conversations again.”

This story was originally published by the Rutland Herald and reprinted under a partnership with the Herald.

Neal is a a reporter for the Vermont Press Bureau. He also files reports for Vermont Public Radio.
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