Jan 22, 2016 - 9001 Mail Service Center. Raleigh, North ... with other automated business processes. BCBSNC and its tech
Louis Patalano IV Vice President & Deputy General Counsel
January 22, 2016 VIA U.S. MAIL & ELECTRONIC MAIL –
[email protected] Kim D’Arruda Special Deputy Attorney General North Carolina Department of Justice Consumer Protection Division 9001 Mail Service Center Raleigh, North Carolina 27699 Re: Request for Information regarding BCBSNC Billing Issues Dear Ms. D’Arruda: We have received your January 11, 2016, letter to Blue Cross and Blue Shield of North Carolina (“BCBSNC”), and I am providing the following responses to each of the questions you have raised. By way of introduction, BCBSNC has encountered numerous challenges when billing our members for their premiums in January 2016, which BCBSNC leadership has acknowledged publicly and with apology, but we are addressing those problems as expeditiously as possible, as I hope will be obvious from our below responses to your ten specific questions. 1.
Provide an explanation regarding how the above-described billing problems occurred.
As you likely are aware, the deadline for the Affordable Care Act (“ACA”) Annual Enrollment Period for coverage effective January 1, 2016 was extended due to “unprecedented demand.” The unprecedented demand and the deadline extension each resulted in problems for BCBSNC as the new annual period arrived. BCBSNC is dependent on the federal government to provide it with ACA enrollment files. The two-day extension for enrollment resulted in additional enrollment activity and pushed back the government’s transmission of final files needed to confirm the correct plan choice for renewing members. The delay in sending files gave BCBSNC fewer days than planned to process them. In addition, the files provided contained inaccurate and/or incomplete information for some customers – which at the minimum causes delays until correct information is subsequently provided. I am sure you have seen and heard reports that insurance carriers throughout the country also have experienced significant problems this month because of the high volume of annual enrollment applications and the inaccuracy and incompleteness of the initial information provided by the federal government. Since 2012, BCBSNC has been in the process of replacing our core health plan technology platform and related software. This is a complex multi-year project not expected to be completed until 2020, which impacts each of our lines of business. The computer system migration, for one of our lines of business, also impacted the period beginning January 1, 2016. Our individual line of business, which represents approximately 500,000 members, was migrated this year beginning with January 2016 policy effective dates. To accomplish this goal, BCBSNC worked with our internal software development teams and external information technology suppliers. Post Office Box 2291 · Durham, NC 27702-2291 · Phone 919-765-7215 · Fax 919-765-4474 ·
[email protected] An Independent Licensee of the Blue Cross and Blue Shield Association
Ms. Kim D’Arruda January 22, 2016 Page 2
When the ACA Annual Enrollment Period began on November 1, 2015, current policyholders began selecting insurance through both the federal exchange and our proprietary off-exchange sales solutions. In addition, new customers began the enrollment process. On December 3, 2015, BCBSNC began processing the new and changed enrollment files in the new system. In December 2015, BCBSNC experienced some issues with the new system, including transactions failing to process, transactions processing incorrectly, and transaction processing running excessively long in contention with other automated business processes. BCBSNC and its technology services providers worked urgently to address issues as they became known in December, but the net result was that BCBSNC started 2016 with a substantial backlog of enrollment transactions that had not been correctly reflected in the new system. When BCBSNC began initiating billing via our computer systems for our individual line of business in January 2016, unintentional billing issues resulted. These were caused by the impact of the backlog in enrollment transactions, incorrect information in the new system, and other issues with the new system that were still being identified and addressed. It is significant to note that we currently believe that most of the issues stem from implementation of ACA plans; we believe that the migration of member accounts other than ACA plans were completed at a more than 99 percent accuracy rate. In sum, the billing problems stemmed from problems associated with January 1, 2016 enrollments and the migration of our individual line of business to our new administrative technology platform. 2.
Describe what BCBSNC is doing to correct the billing problems, both going forward and for the consumers who were billed for cancelled policies. As part of that explanation, please describe how BCBSNC plans to address any overdraft fees, interest, or other fees or charges consumers may have experienced as a result of any incorrect billing caused by BCBSNC.
As soon as we became aware of the billing issues, BCBSNC suspended all premium billing to ensure that our system data is accurate before seeking further payments. BCBSNC is currently performing a detailed analysis of our membership data, including the amounts drafted from member bank accounts versus the draft amount that we have subsequently found to be consistent with the members’ enrollment choices. BCBSNC teams are fully examining all of this data to check for accuracy, and if data is found to be inaccurate, it is being promptly corrected. Any overpayment that is validated is being returned to the member as quickly as possible with a target of between 24 to 48 hours. For customers who have been impacted adversely by billing problems, BCBSNC is working expeditiously to correct any overdrafts or other billing problems. BCBSNC has corrected the overdrafts, and has emailed or written members affected by overdraft activity to let them know the process for seeking reimbursements of any overdraft fees and associated expenses. In addition, we have called affected members to apologize for the error and further explain the process for refunding overdraft fees and other valid, documented charges that they occurred as a result of any overdrafts. Additionally, BCBSNC staffed a local number to receive calls, and members will receive a mailing providing information on how to obtain a refund. BCBSNC has also attempted to provide members with updated information via posts on our website and other public communications.
Ms. Kim D’Arruda January 22, 2016 Page 3
3.
Identify the number of North Carolina consumers billed incorrectly as a result of the above described billing problems and the dollar amount of the overbilling.
As of January 21, 2016, BCBSNC has refunded $1,947,315.63 to 4,637 members who experienced improper overdrafts. As an aside, the computer system errors have also resulted in under billings. Thus far, we have identified nearly 25,000 members who were under billed in January 2016, by an aggregate amount of approximately $1,800,000. 4.
Identify the number of complaints related to the above-described billing problems BCBSNC has received.
As of January 21, 2016, BCBSNC has received 83 North Carolina Department of Insurance (“DOI”) consumer complaints arising from billing issues. Beyond providing the DOI’s Consumer Services Division with responses to the complaints, BCBSNC has been working very closely with the DOI regarding billing issues and other matters since identifying them in early January and will continue to do so. 5.
Provide information on when and how North Carolina consumers who were incorrectly billed will have monies returned to their bank account.
BCBSNC is endeavoring to process refunds within one business day to customers via ACH or wire as soon as an overdraft or improper charge is validated. 6.
Provide an explanation regarding why North Carolina consumers are being billed for cancelled policies.
The primary reasons why members were billed for cancelled policies are (i) the cancellation instructions had not yet processed due to an enrollment processing backlog and (ii) incorrect and incomplete policy cancellations entered in our current technology platform. 7.
Provide an explanation as to why money was withdrawn from North Carolina consumers’ bank accounts when the automatic draft permission was cancelled by the consumer.
We believe that the primary reason for bank withdrawals after cancellation of an automatic draft authorization has been enrollment processing delays or errors in migrating to our current technology platform. The processing delays have resulted in the cancellations being effected after a draft was already initiated. In other instances, members withdrew the automatic draft authorization in our old technology platform through our member website (Blue Connect) and via other methods in 2015, but the update of our current technology platform (transfer of instructions from our previous system to our current system) took place after the billing process ran. The issue was further complicated by the fact that BCBSNC had two separate data migrations in December 2015 (one for off-exchange individual policies on December 7 and one for on-exchange individual policies on December 17).
Ms. Kim D’Arruda January 22, 2016 Page 4
8.
Provide any policies and procedures related to withdrawing payments from consumers’ accounts with and without the permission for automatic draft from the consumers’ accounts.
Please see our attached Individual Payment Options, On- and Off-Exchange Premium Payments and Billing, Modify Billing Entity – U65 policies and procedures. 9.
Describe the process by which North Carolina consumers can request a refund if they were billed incorrectly or money was drafted from their bank account incorrectly.
BCBSNC is seeking to identify and correct all incorrect billings independent of customer requests. Any member impacted by incorrect billings or bank drafts can also contact customer service and request a refund. 10.
Provide an explanation as to why North Carolina consumers who contact customer service representatives are experiencing significant wait times on the phone and describe what BCBSNC is doing to shorten the wait times and to make it easier for consumers to communicate with customer service representatives. In addition, please describe any online procedures BCBSNC has established that will allow consumers to report these types of problems and the expected wait time consumers will experience if they utilize the procedure.
BCBSNC forecasted a 40% increase in call volumes for 2016 – and increased staffing and technology accordingly to meet that anticipated increase in demand. Instead, BCBSNC has been experiencing close to 500% increases in call volumes in the first few weeks of January. To address this unexpected surge in call volume, BCBSNC further increased staffing, increased hours, and increased our capacity to take calls. Additionally, BCBSNC implemented call backs (callers who opted to receive a return call as opposed to waiting for a customer service representative). BCBSNC also increased its capacity for self-service options: members can view their insurance information on Blue Connect and members can also make payments online or through the telephone. Instructions have been mailed to most members, are on our website, and in our telephone messaging. Our efforts to date have reduced average call wait times, but we are working diligently to further reduce the wait time. In closing, BCBSNC is committed to addressing all of the unfortunate problems our customers have experienced, and BCBSNC is working diligently to put these issues behind us. Respectfully,
Louis Patalano IV Vice President & Deputy General Counsel cc:
J. Bradley Wilson, President & Chief Executive Officer N. King Prather, Senior Vice President, General Counsel, & Corporate Secretary
Enclosures
