SPRINGFIELD, Ill. (NEXSTAR) — A Target 3 investigation that revealed Blue Cross Blue Shield of Illinois never notified state regulators about a “material change” in its network is starting to hit the company’s bottom line.
The Illinois Department of Insurance announced a $339,000 fine against the state’s largest health insurance company in a Monday morning press release “for violating the material change notice requirement in the state’s Network Adequacy and Transparency Act.”
Illinois law requires insurance companies to notify state regulators of a “material change” in its network of available doctors and specialists within 15 days. Target 3 investigators first asked the Department of Insurance whether Blue Cross reported a material change on February 22nd. The request, and a subsequent flurry of FOIA requests, triggered several meetings at the department until the fine was handed down one month later.
“This fine should serve as notice that we will require insurers to maintain adequate provider networks and uphold all consumer protections under the law,” Governor J.B. Pritzker said.
The penalty represents the first public enforcement action from the Pritzker administration, which until now had opted to stay out of a private contract dispute between Blue Cross Blue Shield and Springfield Clinic. The agency said it would have been unethical and inappropriate for the state to tilt the scales in a private business matter, but ultimately acknowledged that only one party in the dispute had broken the law.
The fine will cost Blue Cross $1,000 per day for every day it is out of compliance with the law. It is the first of its kind ever issued since the state adopted the new baseline requirements for network adequacy in 2017.
“The Department found that the company did not properly file updated network adequacy filings
following the termination of its contract with Springfield Clinic which serves approximately 100,000
consumers in Central Illinois,” DOI spokeswoman Caron Brookens said. “After months of delay, the Department finally received BCBS’s final filing for its network adequacy review on Thursday. The Department determined that the filings were 244 days late and 95 days late, accumulating a total fine of $339,000.”
The law was adopted five years ago under the Rauner administration, but the agency still has not adopted rules to aggressively enforce it. Other fines could still come down once the department completes its ongoing investigation, especially if it finds Blue Cross Blue Shield’s material change diminished patients’ affordable access to health care, including in drive time, distance, and wait times to see a doctor.
State and federal laws provide special continuity of care protections for pregnant mothers, cancer patients, and other patients undergoing critical medical care; however, cancer patients and pregnant mothers impacted by Blue Cross Blue Shield’s business decisions were stuck with “astronomical” medical bills and were left to navigate a “ghost network” of doctors in a dead-end directory online.
“I’m glad that the Department of Insurance is cracking down on abusers and hope they continue to be vigilant to protect consumers to be sure they have adequate access to doctors and specialists and other care in their areas,” House Majority Leader Greg Harris (D-Chicago) said in response.
Lawmakers are preparing to hold a hearing in the House Insurance Committee to examine Blue Cross Blue Shield of Illinois’ hardball negotiation tactics with Springfield Clinic. One House Democrat has called to revoke the company’s special tax-exempt status.
Two weeks ago, Blue Cross Blue Shield insisted that kicking Springfield Clinic out of its network of providers had not constituted a “material change” in its network. A spokesperson for the company has not yet responded to requests for comment.
“We’re disappointed that the company continues to evade acknowledging this material change,” Department of Insurance Director Dana Popish Severinghaus said. “Under Illinois law, the removal of a major health system, like Springfield Clinic, is a material change that could render a network, or parts of a network, inadequate. We are committed to exercising the Department’s full authority to protect consumers from being harmed in a corporate contract dispute.”
Springfield Clinic officials have not yet responded to requests for comment.
