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Blue Days For Blues In Pennsylvania

MANAGED CARE June 1998. © MediMedia USA
News and Commentary

Blue Days For Blues In Pennsylvania

MANAGED CARE June 1998. ©1998 Stezzi Communications

Two Blue Cross plans in Pennsylvania are regrouping after separate legal actions.

In Philadelphia, Independence Blue Cross has been ordered to stop a contracting practice that competitors said gave it an unfair advantage, and that hospitals complained hurt their bottom lines. The state insurance department told Independence it could no longer write "prudent buyer" clauses into hospital contracts. The clauses mandate that if a hospital signs a contract with another payer for rates that are lower than those negotiated with Independence, the hospital must offer that lower rate to Independence as well.

The state's action grew out of a lawsuit by QualMed, a Foundation Health Systems subsidiary that for years has tried to loosen the hold that Independence Blue Cross and Aetna U.S. Healthcare have had on the Philadelphia market. Together, the two companies account for more than 80 percent of the area's health insurance enrollees.

Meanwhile, the Health and Human Services inspector general has fined Blue Cross of Northeastern Pennsylvania $250,000 for failing to provide Medicare benefits to 5,000 subscribers. The insurer admitted the error but characterized it as a misunderstanding.

The company signed up new enrollees based on promises of specific vision care, dental and pharmacy benefits, but waited for written approval from the Health Care Financing Administration to deliver the benefits. HCFA assumed the benefit plan was already in place. In addition to the fine, Blue Cross of Northeastern Pennsylvania has paid more than $200,000 to subscribers to compensate for unpaid claims.