The claims in reference with the fine to be paid relates to Medicare claims sent in where Blue Cross was the secondary payer. As you can read from the AMA story, when the algorithm determined that an investigation needed to be conducted, the claims sat. You can read the full details on the settlement, where as usual nobody accounts for any wrong doing. The amount paid to doctors was estimated to be around $5 million with another $3 million going to the state.
Horizon Blue Cross also agreed to revise how they handle claims, I guess look sooner at those where the algorithms generates questions. The doctors and the state will be reimbursed with 12% interest. As a side note, Blue Cross and/or subsidiaries are also Medicare contractors.
Lawmakers Finally Asking About Medicare Contractor Conflict of Interests-Subsidiary Watch and Inquiries-Mergers and Acquisitions
Back in December of 2008 the insurance companies were suggesting more algorithms and business intelligence to help keep costs down and perhaps this is one that needs a little work. Blue Cross now does have their own intelligence group.
Health Care Insurers Suggest Algorithms and Business Intelligence solutions to provide health insurance solution
The need for a Department of Algorithms might be getting a little bit closer. BD
“Department of Algorithms – Do We Need One of These to Regulate Upcoming Laws?
The Blues plan in New Jersey has signed a consent order to reprocess claims in which it was paying as a secondary insurer along with Medicare, which could mean more than $5 million paid out to physicians and members, plus more than $3 million to the state.
Horizon Blue Cross Blue Shield of New Jersey was routinely setting those claims aside as "pending," leaving them unpaid while the company ascertained whether a claim stemmed from a preexisting condition, according to the state. Under the agreement with the state's Dept. of Banking and Insurance, the company must pay any money owed to members and doctors, plus 12% interest, pay a fine to the state and disgorge the interest it made off the unpaid claims. The total payments will be more than $8 million.
amednews: New Jersey Blues ordered to pay $8 million for putting claims on hold :: March 28, 2011 ... American Medical News
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