By FELICE J. FREYER
Journal Medical Writer

Linda A. Johnson, the state Health Department's top watchdog for the managed-care industry, is still uneasy about what she found on an  unannounced visit in March to one division of BlueCHiP, a health  maintenance organization.

Johnson asked a supervisor to turn over all the files she was working on that day. And in that chance review alone, Johnson and her staff found a slew of problems that have left her with lingering concerns about the "corporate culture" at Blue Cross & Blue Shield of Rhode Island, which owns BlueCHiP, and the culture of managed care itself.

Among the findings:

Copies of letters were placed in patient files while the originals were destroyed instead of mailed, thus seeming to document a communication that never took place.

A patient appealing denial of payment for home-nursing visits mentioned three times in her letter that her medical condition left her unable to speak. Nevertheless, the response from BlueCHiP, on stationery without an address, instructed her to call the plan.

Patients who were advised by their doctors to go to the emergency room were denied payment because they couldn't prove that their doctors had  authorized the emergency visit.

A patient who sought a follow-up test after an abnormal pap smear was denied payment because she did not receive prior authorization, even though the original pap smear did not require such authorization.

An employee took confidential patient records home.

A letter to a patient, apparently pieced together out of template letters, made no sense.

Johnson and her crew went to BlueCHiP after receiving a call from a temporary employee who had worked in the HMO's complaint and appeals division. The employee had lost his job there after refusing instructions to back-date letters so it appeared that they were sent as many as 16 days earlier.

This practice, later confirmed by the Health Department, was intended to meet BlueCHiP's policy requiring responses to appeals within two days. (The Health Department requires only a "reasonable" period of time for responses.)

BlueCHiP paid a $10,000 fine for the back-dating and the other problems that came to light during the review. But details of those other problems became public only this week, when Blue Cross completed its plans for fixing them.

By all accounts, BlueCHiP responded swiftly and comprehensively to the problems that the Health Department found, which were limited to one division, the Grievance and Appeals Unit. It immediately fired the supervisor responsible for the back-dating; the Health Department found
no evidence that anyone above her knew of the practice.

The HMO overhauled the unit, including hiring a new manager, beefing up the unit's staff with new hires and people transferred from other departments, rewriting letters to customers, establishing a new database tobetter monitor the unit's performance, tightening its confidentiality policy and
giving the Health Department monthly status reports on its corrective actions.

"We had begun our corrective action before the department brought some of their findings," says Scott Fraser, Blue Cross spokesman. "We said, 'This has got to stop.'

The Health Department accepted BlueCHiP's remedial plans, but the Office ofManaged Care Regulation, which Johnson heads, will make additional unannouncedvisits to monitor the situation.

Referring to the practice of discarding original letters while putting copies in the files, Johnson says, "Is that the corporate culture? . . If wecan't trust that your files are accurate, how can we check on it? The only way we can check on it is to call every patient and ask, 'Did you receive the letter?'

Johnson noted that employees readily acknowledged discarding originals, and seemed to regard it as normal business practice. "I don't think they even thought they were being devious," Johnson says. "That scares me even more."

But Blue Cross's Fraser emphasizes: "Certainly that is not our corporate culture. . . . We just don't tolerate that. That's not our way of doing business."

Some of the other problems, Johnson says, illustrated how absurd and self-defeating managed care can get. For example, BlueCHiP paid for a woman's pap smear, but wouldn't pay for a follow-up pap smear when the first one was found to be abnormal. The denial was upheld on appeal,
until the Health Department became involved.

Johnson says she couldn't cite chapter and verse in state law that said the follow-up should be covered. Instead, she cited common sense. "I just sat there and said, 'This is stupid.'

"I don't think that's exclusive to Blue Cross," she says.

As for the emergency-room denials, BlueCHiP has decided to focus its =managed-care efforts on providers or patients who are responsible for an excessive number of emergency-room visits. "That makes sense to me,"  Johnson says.

Previously, some people who had received the required doctor's =permission to go to the emergency room were denied payment for the visit because they didn't have evidence of the authorization. Johnson says no law specifically prohibited this practice, but she asked BlueCHiP, " Why are you bothering?' All the appeals coordinator has to do is call Dr. Johnson and ask, 'Did you tell Mary Jones to go to the emergency room on this date?' Instead, we go through this lengthy process of denial -- and that's only if the person complains."

Johnson says the Health Department accepts Blue Cross's assertion that no one at higher levels knew of the widespread problems in the Grievance and Appeals Unit.

But even that is worrisome, she says. "Do we really know what's going on here?" she says. "It's hard to really know what goes on behind those  closed doors all the time. It's hard for them to really know what goes on downstairs in [their own] companies.

"Thank God for people who call here. The consumer and providers are the ones with information as to what's happening on the frontlines."

The Providence Journal Company
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