MONTPELIER — Blue Cross Blue Shield of Vermont is seeking $10.3 million from the state for premiums and services it did not receive payment for as the insurer works to close out its 2016 book of business on the state’s health insurance exchange.
It is the third year in a row since Vermont Health Connect launched that Blue Cross Blue Shield of Vermont and the state are undergoing a process known as reconciliation. The state paid $1.6 million to BCBS for the 2014 plan year and $3.5 million for the 2015 plan year.
The reconciliation process is necessary because the state’s online insurance marketplace was not fully implemented when it launched and some technological elements did not function correctly, resulting in discrepancies within the billing and enrollment system of Vermont Health Connect. In some cases, consumers terminated their insurance plans but the change took months to take effect within the system.
BCBS is owed money because elements of the exchange did not previously communicate properly with each other. In some cases, BCBS did not receive premium payments for customers who purchased health plans on the exchange. In other cases, the insurer paid out claims for patients whose insurance had been terminated by the state. Interruptions in the flow of data between the state, insurers and a third-party billing vendor are the cause.
Cory Gustafson, commissioner of the Department of Vermont Health Access, said BCBS sent a letter to the state two weeks ago outlining the amount owed. He said BCBS believes it is owed $8.9 million in premiums for the 2016 plan year and $1.39 million in other costs.
The number owed to the insurer rose significantly for the 2016 plan year because of a change in methodology. Gustafson said the previous administration of Democratic Gov. Peter Shumlin signed a memorandum of understanding in December 2016 that created the new process.
In previous years, the state was responsible for covering claims paid by BCBS after a consumer’s insurance coverage had been terminated but not property communicated to the insurer. The agreement signed by BCBS and the Shumlin administration made clear that the state would pay the cost of premiums rather than claims when consumers’ plans were terminated but not communicated properly — even if no claims were made.
Cassandra Madison, operations manager for VHC, said the previous methodology used by BCBS and the state was more complicated. Verifying claims was difficult and the contracts BCBS has with health care providers do not allow them to recoup money if a claim was paid after a consumer terminated their health plan.
Gustafson, who left his position as the director of government and public relations for BCBS late last year to work in Republican Gov. Phil Scott’s administration, said the state is bound by the agreement signed by the previous administration.
“We’re in the position to execute a process that was agreed to by people that aren’t necessarily in these chairs,” he said.
The technology issues that have caused the need for the reconciliation process have largely been addressed, Madison said. For the 2017 plan year, there are “very low discrepancy rates” and the state and BCBS are now able to undergo monthly reconciliation as the system was designed to do. The backlog of consumers requesting changes to their accounts, including terminations, has also been eliminated, she said.
The system improvements should prevent the need for a year-end reconciliation and the need to make a large payment to BCBS next year, Madison said.
“We feel like we are at a steady state, business-as-usual, where we would have liked to be two years ago. We do not believe there should be any payments for 2017 plans,” she said.
Gustafson said the 2018 fiscal year state budget does not include funding for the $10.3 million payment requested by BCBS. In previous years that cost has been addressed in the annual budget adjustment bill, a mid-year appropriations bill that lawmakers use to address budgetary needs halfway through the fiscal year.
“You don’t have really anything to go on until you have a number. It isn’t budgeted yet,” Gustafson said. “It’s been handled before in budget adjustment and that’s probably where it will end up again.”
The $10.3 million estimate must also be reviewed by a third-party before any payment to BCBS is made. The memorandum of understanding signed by the Shumlin administration required the third-party assessment to validate the request.
BCBS and the state are working on securing a third-party entity to review the request. Once a contract is signed the validation must occur within 60 days. The $10.3 million request could be lowered after the request is reviewed, Madison said.
“None of us can sit here today and say where this is going to end up,” she said.
Gustafson said state officials will update the Legislature’s Joint Fiscal Committee Friday on the reconciliation process and provide them with the estimate from BCBS.
BCBS officials did not immediately respond to a message seeking comment Thursday.