Regence improperly withdrew funds from consumers

Regence Blue Shield is again being scrutinized by the Washington insurance department--this time for "an ongoing pattern of errors and problems," including withdrawing funds from consumers' bank accounts.

The issues stem from Regent's "SurePay" system, which malfunctioned last month and caused Regence to improperly access the bank accounts of 6,400 people. In some cases, the state's largest insurer deducted higher-than-approved premium amounts, often totaling thousands of dollars, which resulted in consumers receiving overdraft notices from their bank.

This error was likely a result of Regence giving out routing numbers to the banks for accounts that didn't correspond with policyholders, reports the Seattle Post-Intelligencer.

Insurance Commissioner Mike Kreidler has ordered Regence to correct the problems and prepare a corrective plan by the end of September. "The Regence Group needs to gets its act together," he said.

In addition to the SurePay system errors, Kreidler listed more problems with Regence, reports KEPRTV. These include:

  • Medical claims of 90,000 retirees have gone unpaid for months, totaling as many as 300,000 individual claims.
  • A pattern of claims have been delayed because Regence temporarily misplaced documentation.
  • A customer-service number told customers help was only available on Thursdays, but there was no answer on Thursdays.
  • After-the-fact denial of claims for many pre-authorized medical services, sometimes within 72 hours of a scheduled surgery and without a reasonable basis.

Adding fuel to the fire is the fact that the computer failure happened on Aug. 5, but state officials didn't learn of it until weeks later, when insurance regulators tipped them off. That led to a meeting last week among regulators from the four states where Regence operates. But the insurer volunteered no information about the SurePay problems, and when questioned, provided incomplete and inadequate responses, the Seattle Times reports.

Regence conceded that it's been experiencing "operational difficulties," explaining  the service problems were primarily caused by a "one-time system change at the beginning of the year," as well as benefit changes under healthcare reform, notes the Times.

However, Kreidler disagreed with this assessment, saying "many of these things seem to be systemic problems, rather than isolated incidents."

To learn more:
- read the Seattle Times article
- see the Seattle Post-Intelligencer article
- check out the KEPRTV article

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