Excellus BlueCross BlueShield pays $3.1M settlement for wrongly denied claims

Last week New York Attorney General Eric T. Schneiderman announced a $3.1 million settlement with Excellus BlueCross BlueShield requiring the insurer to refund 12,000 plan members who overpaid their healthcare providers as a result of the company's improper accounting of deductibles.

According to the press release, the attorney general's Health Care Bureau began an independent investigation into Excellus' failure to properly track members' deductibles and out-of-pocket expenditures into its automated claims system following the receipt of customer complaints.

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The investigation found that Excellus failed to pay customers' claims even after the required deductibles were met.
After Excellus wrongly denied claims, providers either billed the customers for the cost of the services or absorbed the loss themselves.

Excellus reported that these accounting errors were the result of a technology glitch following modifications to its software. As a result of the computer errors, claims processed after Sept. 1, 2011, were denied for failure to satisfy a deductible that had already been met. Excellus' accounting errors primarily affected members covered under its high-deductible plans.


The settlement also requires Excellus to properly account for members' deductible and out-of-pocket expenses to prevent similar improper denials of claims in the future.

"An insurance policy is a two-way street. 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," Schneiderman said in a press release.

[See also: New York AG levies charges on insurers' reimbursement scheme]

According to the attorney general's press release, Excellus said that is has repaired its faulty claims system. The company also said that it has made payments totaling approximately $700,000 to customers who were owed less than $250 and another $2.4 million to customers who were owed more than $250, as well as to participating providers.

Excellus has agreed to conduct outreach and ensure that all members who overpaid providers because of Excellus' accounting error receive restitution, and to audit and monitor its claims processing procedures to ensure the problems do not recur.



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