TDI Fines Blue Cross Over Non-Network Claims

State insurance regulators fined Blue Cross and Blue Shield of Texas (BCBSTX) $250,000 and ordered the insurance giant to repay $3.9 million to members for underpaying claims related to treatment in out-of-network hospitals and other medical facilities. Blue Cross denied the allegations but agreed not to contest the Texas Department of Insurance (TDI) findings of fact, a TDI consent order [ PDF ] said.

The restitution must be paid over the next several months, said State Insurance Commissioner Mike Geeslin, adding that if the payments do not total at least $3.9 million, BCBSTX must pay the balance to the state as an additional fine.

Blue Cross must notify affected members of the reimbursements by mid-December. In addition, Blue Cross officials have to implement new procedures for paying claims at out-of-network facilities by the middle of August.

"TDI has received complaints that BCBSTX has set its 'allowable' amounts for uncontracted facilities at unreasonable low rates that are less than the amounts billed by the facilities and also less than the rates paid to BCBSTX contracted facilities," the TDI order said. "TDI has alleged that BCBSTX's reimbursement rates are unreasonably low in light of representations made by the company in its advertising and its policies and that the reimbursement rates are so low as to violate Texas insurance laws and regulations."

TDI Deputy Commissioner for Regulatory Affairs Doug Danzier told the Dallas Morning News that the underpayments dated to Jan. 1, 2004, and involved thousands of Blue Cross members in Texas enrolled in PPO plans. He said most of the affected consumers sought care in out-of-network hospitals because of medical emergencies or because the services they required were not available in regular network facilities.

Blue Cross did not respond to a request for a comment on the TDI action.


Action , Aug. 18, 2008

Last Updated On

January 16, 2019

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