[O]ver the past two months, Blue Cross and Blue Shield of Vermont has delayed tens of thousands of dollars in payments to a number of medical providers, putting a financial strain on small private practices in Vermont that rely on income from the insurer.
The insurance company says the delays stem from a new operating system rolled out at the beginning of the year that has made it difficult for the company to verify the accuracy of some claims. In the meantime, Blue Cross and Blue Shield is offering loans to providers who are faced with cash flow problems because of the glitch.
The slowed payments have posed a major threat to several independent providers who say Blue Cross Blue Shield of Vermont has yet to tell them when they will be paid for services.
Heather Parker, the co-owner of Richmond Pediatrics, said Blue Cross owes her practice tens of thousands in claims since January.
She and her husband, Paul, who are used to receiving large weekly payments from the insurer, are preparing to borrow money from their personal accounts to keep their pediatric practice afloat.
Parker said Blue Cross payments constitute about two-thirds of the revenue for the practice.
“I’m so upset because it’s not like they don’t have the money,” she said. “Our patients don’t even know what’s going on. They have no idea that they’re paying their premiums and their doctors aren’t getting paid.”
Sara Teachout, a spokesperson for Blue Cross, said the company doesn’t know when the medical practices will be paid in full.
The insurance company is offering to loan any provider portions of what it expects it will owe them in claims while it works out the kinks in its new operating system.
“The minute we saw that this could potentially be a problem, we did really work proactively to try and help all of the providers to make sure that there weren’t any financial burdens,” Teachout said.
Blue Cross has 30 days to reimburse providers for claims before they begin to accrue interest. However, in practice, Blue Cross has paid many doctors on a weekly basis, and some practices have come to rely on more regular payments from the insurer.
75 private providers impacted by delays
Susan Ridzon, the executive director of HealthFirst, an association of private medical practices in Vermont, believes that the bulk of the 75 businesses in her network have faced delayed payments.
She said that one practice had to suspend payroll, and another had a take out a line of credit to keep the business going.
The small practices are particularly endangered by the halt in income, she said.
“It’s not easy to run an independent primary care practice. When you’re messing with the cash flow like that you could put a practice out of business pretty fast, and then where do those patients go?” Ridzon said.
Although the Blue Cross tech problem has put some independent doctors at risk, Ridzon said she was glad to see the insurer advancing payments to practices. She called it “a good faith effort to quell the immediate need of cash flow crisis.”
While the new system has processed some payments regularly, the extent of the problem is not clear. The Office of the Health Care Advocate was unaware of the issue, and the Vermont Association of Hospitals and Health Systems did not respond to a request for comment.
Teachout said the company has “done everything we could to proactively reach out and work with providers because we recognize that delaying claims even a little bit could be a problem for some of them, especially the smaller ones.”
One doctor who owns a small practice and spoke with VTDigger on the condition of anonymity said he relies on Blue Cross for 50 percent of his income, and hasn’t received any payments in 2019.
“Any small business cannot miss 50 percent of its income for two and half months. It’s completely untenable, it’s bankruptcy territory,” he said.
He said it was “egregious” that the insurer would roll out a new operating system without knowing it would pose problems.
“It’s completely unacceptable that they would risk upending everybody’s business without beta testing their new system,” he said.
Teachout said while they tested the system, it’s going to take more time to fix flaws. “It’s a transition period, and we need to work through it,” she said.
“We’ve talked to hundreds of providers and most of them have been able to work with us to resolve these issues,” Teachout said.
