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Blue Cross Blue Shield

The Blue Cross Blue Shield of North Dakota building in south Fargo in February 2015.

FARGO — Insurance regulators have fined Blue Cross Blue Shield of North Dakota $125,000 for improperly denying some mental health and substance abuse claims as well as failing to report suspected fraud cases.

The actions, announced by North Dakota Insurance Commissioner Jon Godfread, follow a 15-month long examination of the state's leading private health insurer, which covers 65 percent of the state’s group market and 86 percent of the individual market.

Under an agreement with the North Dakota Department of Insurance, the Blues have agreed to correct the problems, some of which already have been resolved, and are moving to hire a new compliance chief who will be part of the executive team.

The review of substance use disorder and mental health claims came after complaints from providers and consumers that the claims were not being handled properly, Godfread said Monday, July 8.

Among the complaints were reports that mental health claims were not treated the same as claims for other medical services, as required under a 2008 federal law establishing parity of treatment.

“They were saying their claims weren’t being processed in the way they were by other insurers, to the detriment of the consumers,” including having to file extra paperwork, Godfread said. “They tended to get buried by paperwork,” sometimes resulting in delays.

Blue Cross Blue Shield of North Dakota executives have cooperated and readily agreed to make changes suggested by reviewers, he said.

“There’s never been a feeling that they don’t see the importance of this coverage,” Godfread added. “I think they take this seriously.”

Sometimes partial coverage was granted for mental health claims that were found to involve improper denials, said Jeff Ubben, deputy insurance commissioner and general counsel. For instance, he said, claims adjusters might have approved outpatient treatment, but denied inpatient treatment.

“It wasn’t always a complete denial of coverage,” Ubben said.

Also, Godfread said, the law requiring parity of mental health coverage is still relatively new, and the claims can be complex. “It’s an evolving area,” he said.

Similarly, coverage of telemedicine is an emerging area, addressed in a law passed by the North Dakota Legislature in 2017. Reviewers found that Blue Cross Blue Shield of North Dakota improperly denied some telemedicine claims.

“This is another one where the provider community came to us,” with complaints of claim denials for coverage that clearly was required by the new law, which provides for broad coverage, Ubben said.

Tim Huckle, the North Dakota Blues president and CEO, said health insurance has become increasingly complex in recent years, and the company is beefing up its compliance division to keep pace.

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“Our business has become more and more and more complex,” he said. “We are looking for somebody at the executive level to lead compliance,” and will add more resources once that person is on board to implement changes and track compliance.

Mental health and substance use disorder claims, Huckle said, are complex and difficult to decide.

“It’s not always a black-and-white decision with each issue,” he said. “It can be a bit gray.” Among other factors, the insurer wants to pay claims for evidence-based treatments that have been proven effective.

“We want to make sure we’re paying for high-quality treatment options,” Huckle said. New policies, requiring fewer pre-authorizations, are now in effect, as well as new eligibility criteria.

“I think we’ve made quite a bit of improvement in the area,” he said, referring to mental health and substance use disorder claims. “We want to make sure we’re doing it right on behalf of our members.”

A failure to report certain instances of suspected insurance fraud was based on a misunderstanding. The company was gathering information to determine if the suspected fraud cases could be substantiated, Huckle said. Now suspected fraud cases will be reported promptly, he said.

Besides paying the fine, Blue Cross Blue Shield of North Dakota expects to invest more than $300,000 to address problems identified in the examination. The costs will not be passed along to members in the form of higher premiums, Huckle said, but instead will be accomplished through “reductions and efficiencies” in the current administrative budget.

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