Consumer complaints against Blue Cross of California prompted regulators to demand last year that California's biggest health insurer speed reimbursements and handle inquiries more quickly, state Department of Insurance officials said Thursday.
Most of the complaints stemmed from late payments, said David Stolls, chief of policy services for the department's consumer affairs division. But he said Blue Cross has begun to correct its service problems.
According to an internal Blue Cross memo, the state attorney general's office threatened to sue the insurer earlier this year because of growing complaints about missing records, a failure to respond to inquiries and late payments. The memo, written by Blue Cross corporate auditor Michael J. Lohnberg and dated June 9, said that there were 1,483 complaints to the insurance department last year by Blue Cross policy-holders and that the department judged 79% of them to be justified. It said there were 1,064 complaints in 1984, of which 76% were deemed justified.
Insurance department officials said a lawsuit now appears unlikely. Blue Cross executives have begun holding quarterly meetings with the insurance department and have presented a plan to reduce complaints, Stolls said.
"We're seeing signs of substantial progress at this point, but it's still too early to give them a clean bill of health," said Everett Brookhart, chief of the department's consumer affairs division. He added that the nonprofit insurer has been afflicted with customer service problems ever since Blue Cross of Northern California merged with Blue Cross of Southern California in 1982. The merger spawned management dissension, computer woes and service problems.
Brookhart said complaints have not started to decline, but Sharrell Blakeley, a spokeswomen for Blue Cross, disagreed. She said 154 complaints came in during July, down from 295 in April.
Blakeley said Blue Cross has assigned more workers to answer phones, resolving more inquiries on the first call. She said it also installed a better computer system to track claims.
Herschel Elkins, who heads the attorney general's consumer unit, said his agency became involved more than six months ago because it was getting complaints. "When we contacted the company, we couldn't get any reply," he said.
He said that because Blue Cross seemed to be making progress, the matter now rests with the insurance department. He said that he could not recall whether his agency had threatened to sue but that it did write to Blue Cross demanding action.
"The biggest problem with Blue Cross is their inability to come to grips with the volume of work they're handling," said Ken Varden, an aide to Stolls.