Illinois penalizes Blue Cross Blue Shield for falling short of standards

Illinois is kicking Blue Cross Blue Shield out of its Medicaid managed-care program, accusing the insurer of failing to meet several key standards for its members.

The insurer’s network of providers is too narrow and has resulted in low-income patients not having access to necessary medical services, including primary care physicians, hospitals and specialists in multiple areas of the state.

“The department has concluded that the contractor is in substantial noncompliance with the network adequacy requirements of the contract,” stated a March 21 letter from the state Department of Healthcare and Family Services to Blue Cross.

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The state has also fined Blue Cross $100,000 for its failure to respond to a large number of grievances and appeals from its members. In an April 6 letter detailing the fines, the state threatened that an additional $50,000 fine would be levied for every subsequent 30-day period in which the insurer did not right its wrongs.

The department has said that the enrollment restriction will be lifted once Blue Cross presents “necessary improvements” and acquires “an adequate statewide provider network.”

Modern Healthcare notes that Illinois recently fined Blue Cross another $87,500 for problems related to its handling of grievances in a separate Medicaid program.

A longstanding criticism of Medicaid has been that it does not always provide its low-income beneficiaries easy access to necessary medical services because many doctors are reluctant to participate in the program, which generally offers much lower reimbursement rates than Medicare or commercial insurance.

As the Illinois case demonstrates, allowing private insurers to manage the benefit does not necessarily lead to a broader network of providers. The same problem has emerged with the Affordable Care Act; many enrollees have complained that it’s hard to find providers in their area who will accept the insurance that they purchased through the Obamacare exchange.

In fact, in 2015, the American Academy of Emergency Physicians noted an increase in the number of insured patients who were resorting to the emergency room for basic care, a trend that the organization attributed to narrow networks that left patients with few options for setting up a visit to a doctor.