BUFFALO, NY - The New York State Financial Services department penalized HealthNow New York, parent company of BlueCross BlueShield of Western New York for not providing complete benefit statements that are required under state law to its members. They were also fined for not telling members how to appeal when a claim is denied.
The fines are the result of an audit from 2004-2008. The state found approximately 164,000 instances where HealthNow did not provide an explanation of benefits with the necessary words for a member.
Ironically, the issue of explanation of benefits was the focus of a lengthy investigation Channel 2's Claudine Ewing did last year when a man questioned his bill and sought a proper understanding of billing charges. Now the state has come down on the health insurer, saying consumers have a right to know what their health plans cover and what they don't cover.
"We strongly believe we are the leader in customer service, said Julie Snyder, director of Corpoate Relations for BlueCross BlueShield of WNY. "The issue with the audit was the inability for us to produce for the auditors specific records. Certain records were not available to the auditors and that was part of the fine. We have certainly improved our record-keeping, both hard copy when needed, but more importantly we have been able to update and upgrade our technology so we can access those records in the case of any audit."
BlueCross BlueShield of Western New York says this $700,000 fine has been paid from their reserve fund. It will not be passed on to those paying for health premiums.
BlueCross BlueShield says they were "fully cooperative" with the state for this audit.
Snyder told us that the state's headline that they failed to provide complete explanation of benefits and rights to its subscribers as "inflammatory."
The violations found in the DFS audit include:
• Failing to send explanation of benefits statements that contained all the wording required by law for certain claims which were denied in part or in full. This included instances when the explanation of benefits statements failed to contain proper appeal rights.
• Failing to file certificates of appointment for its insurance agents.
• Failing to file notices of appointment of producers with the superintendent within fifteen days from the date that the agency contract was executed or the first insurance application was submitted.
• Failing to notify the Department of its insurance agents' terminations.
• Failing to ensure that commissions were paid only to licensed producers.
The health insurer is revising their procedure on issuing explanation of benefits statements. They also put in writing that the violations were not a way for them to skirt around insurance laws.
HealthNow is New York is the region's leading health plan with approximately 800,000 members.