Excellus repays $3.1 million following claim-denial glitch

Excellus BlueCross BlueShield has repaid plan members and providers after a fall 2011 computer error caused it to deny claims made by individuals who had met their insurance deductibles.

Rochester–based Excellus, which is Central New York’s largest health insurer, issued $3.1 million in repayments to consumers and providers. The payments meet the requirements of a settlement announced today by New York’s attorney general. That settlement also calls for the health insurer to audit and monitor its claims processing to prevent future erroneous denials.

Excellus was working on the claim-denial problem before it entered any discussions with the attorney general, the insurer said in a statement.

“We’d like the record to reflect that the agreements reached with the state are not a ‘$3 million settlement’ that some headlines have suggested,” Excellus said in its statement. “That dollar reference includes the claims payments we already made to our customers with interest that we acted upon ourselves. When the computer problem occurred, we proactively made sure we took all steps necessary to ensure our members’ claims were properly paid.”

The insurer added that it self-reported the claim-denial problem to the state. The attorney general’s office, meanwhile, said that the settlement comes after it received customer complaints and started an investigation with its Health Care Bureau.

That investigation found that, starting in September 2011, Excellus denied claims from 12,000 customers for not meeting their deductibles when those customers had in fact met their deductibles. That left providers to bill customers or absorb losses, according to the attorney general. High-deductible plan members were primarily affected.

The health insurer repaid about $700,000 to customers who were improperly denied claims of less than $250, the attorney general’s office said. The insurer paid $2.4 million to customers improperly denied claims of more than $250 and to participating providers.

“An insurance policy is a two-way street,” Attorney General Eric Schneiderman said in a news release. “New Yorkers who live up to their end of the bargain by paying their premiums and deductibles deserve to have their insurance company live up to its promises by properly paying their claims.”

Members affected by the issue do not need to take any action at this time, Excellus said. The insurer will send them a letter in early January containing instructions regarding any unresolved claims.

“We conducted a thorough review of claims for every potentially impacted member to make sure their deductible totals and related claim payments were corrected,” Excellus said. “We also communicated with members, providers, employer groups, and state regulators about the steps we were taking to fix the problem.

“We apologize for the problems the accumulator issue has caused for our members and providers.”

Contact Seltzer at rseltzer@cnybj.com