Health Care

Blue Cross Blue Shield seeks $10.3M for unpaid Vermont Health Connect premiums

Cory Gustafson
Cory Gustafson, the commissioner of the Department of Vermont Health Access, testifies in front of the Senate Health and Welfare Committee in January. Photo by Erin Mansfield/VTDigger
Vermont’s largest health insurance company is seeking $10.3 million from the state this year for issues related to Vermont Health Connect.

Of that amount, Blue Cross Blue Shield of Vermont says the state needs to pay $8.9 million in unpaid insurance premiums for customers. The remaining $1.4 million is for the state’s outstanding bills, according to a memo from Cory Gustafson, the commissioner of the Department of Vermont Health Access. Gustafson is a former lobbyist for Blue Cross.

Since 2014, the insurance company has requested a total of $15.4 million in payments for unpaid premiums and other costs associated with Vermont Health Connect.

When Vermont Health Connect does not make changes tied to a customer’s personal circumstances, such as the birth of a baby, or does not record changes in income, insurance claims have been submitted to the wrong insurer or without considering changes to an individual’s “change in life circumstances,” Gustafson said.

Since 2014, because of ongoing technological challenges, the state and Blue Cross have been reconciling customers’ insurance accounts at the end of each year, even though both parties said they would prefer monthly reconciliations.

Those reconciliation issues led to a large backlog of customer account changes that peaked around 10,000 in 2015. Gustafson said the two parties can now finally do monthly reconciliations, and that the state has caught up on the backlogged account changes.

However, during 2016, Vermont Health Connect “accrued significant backlogs due to system issues in 2014 and 2015,” Gustafson wrote.

In February 2016, after many thought the backlog was going down, it surged to 5,700, officials said at the time, and the CEO of Blue Cross said the company would likely need a settlement for the 2016 plan year.

In 2014 year, the state paid the company $1.6 million for similar issues. For the 2015 year, the state paid $3.5 million.

Gustafson said then-Gov. Peter Shumlin’s administration agreed in late 2016 to change the methodology for paying Blue Cross. The administration agreed to pay Blue Cross for payments customers owed for premiums, instead of the amount owed on medical claims.

“I think it’s important that there’s a major shift here, and the number has gone up significantly,” Rep. Bill Lippert, D-Hinesburg, the chair of the House Health Care Committee, said at the meeting. “Does this administration believe that this is the way that this should be done as well?”

Sarah Clark, the chief financial officer for the Agency of Human Services, which includes the Department of Vermont Health Access, said she could not answer the questions, and that Gustafson was out of the country.

“I’m guessing that this number is considerably higher based on premiums than on claims,” Lippert said.

Gustafson’s memo said the requested $10.3 million number would be reviewed by a third party. The department will be opening up a bid process for the third party reviewer.

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Erin Mansfield

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