LUCEY'S OBJECTIONS

While he said he could not recall details, four separate sources told Milwaukee Journal reporters that Lucey specifically refused to name anyone to the committee when it started because he didn't want to put any seal of approval on it. "Blue Cross tried and tried and tried to get the governor to name somebody who would be identified as the governor's representative on rate review," said Helen Nelson, a rate committee member and director of the Center of Consumer Affairs at the University of Wisconsin Extension.

Warren Von Ehren, executive director of WHA, said: "It is my understanding that if the governor were to appoint someone directly, that would be tantamount to the governor's saying he endorses a rate review program, which he was not willing to do."

STATE'S ROLE

Blue Cross officials like to point to Mrs. Nelson and Robert Durkin, assistant administrator of the Division of Health Policy and Planning, as the "state appointees" to the board.

Both said they joined the board as Blue Cross-WHA joint appointees, and WHA confirmed this.

But Blue Cross incorrectly claims in a promotional flyer touting the program that the committee includes a representative "from the governor of Wisconsin."

PANEL'S MEMBERSHIP

The Rate Review Committee has 18 members representing Blue Cross, WHA, hospital officials, labor, business, doctors and the public. Most members are appointed by Blue Cross, WHA, or other hospital or medical groups.

But on July 1, the committee will be expanded to 20 members and will have much broader representation. The state will appoint six representatives, with no more than three being state employes. The WHA will appoint six, with no more than three being WHA or hospital employes. Blue Cross will appoint six, with no more than three being Blue Cross employes. The state and WHA will make two joint appointments.

Mrs. Nelson conceded that the committee had performed a kind of holding action.

TREND UNCHANGED

"Primarily, I think the committee has served as a mild deterrent to even greater increases," she said. "It really doesn't change the trend. It puts the damper on."

But she added: "What clout have they got? You've got to have government clout in this thing and we should have had it long ago. My heart is not in this procedure."

Some of the rate review members-tied to Blue Cross and the hospitals and sympathetic to the hospitals' problems-often end up sympathizing with each other, she said.

"How far is one member going to go to tell another one, 'You can't have that machine?" she asked.

OPTION ACKNOWLEDGED

Asked why the rate review committee had not forced a hospital to close, eliminate some beds or do away with a specific service in the face of low occupancyLeo Suycott, president of Blue Cross, said: “Hell, we know that option is sitting right in front of us.

"Do we wipe that hospital out? Are we qualified to wipe it out? Should we wipe it out?

"Why don't you put that into your story, that you wouldn't give them a rate increase and (you would let) the hospitals close up?"

That is exactly what Lucey and others said they would do.

"I think some hospitals have got to be closed," Lucey said. If the rate review committee can't or won't do it, somebody else should, he said.

LAW FAVORED

Lucey said he still favored legislation to curb health costs.

"I wouldn't say their system doesn't work." he said. “I sav that a state regulatory body would be more effective."

Some other states, notably Connecticut and Maryland, have such state regulatory bodies. They appear to be more successful than Wisconsin's voluntary plan, according to Lucey and a special report by Louis Orsini of the Health Insurance Association of America.

Connecticut officials claim $10.8 million in savings from trimmed rate increases in two years, compared with $6.8 million in savings here in the first two years. And Connecticut has fewer hospitals than Wisconsin.

Moreover, hospital charges have risen 40 percent slower in Connecticut than in the rest of the country since that plan began, according to the insurance association report.

LUCEY RESPONDS

Lucey was asked about the arguments of hospital officials that low occupancy hospitals must be left open to avoid local economic damage.

"Well, if you are not concerned with efficiency at all and you just want to generate jobs, you can do that," he said.

"But I don't like to look at the medical care industry as a boondoggle. Now if they want to argue that it is a boondoggle, they're welcome to that argument." Blue Cross and WHA enjoy talking about their partnership in the program. "It's been a partnership," one knowledgeable source said about the program. "But it is a Blue Cross program."

Blue Cross, in fact, provides the entire seven man staff for the program and picks up the entire $160,000 tab for it.

COST ARGUMENT

Blue Cross and WHA officials insist that the committee has been a strong force for cost containment. Their view is that the very existence of the program has made more hospitals aware of rising medical costs and has held down the size of the rate increases. Without the program, they say, rates would be even higher than they are now.

"Nobody said the rate review program is a finished product," said Von Ehren. "It's changing all the time. Yes, there were deficiencies in the rate program. I think, now, these are being recognized and are going to be addressed."

When interviewed, Suycott was almost unwavering in his defense of and praise for the committee:

"I think it has been extremely effective when we yardstick it against the effectiveness of other states across the country. There aren't too many effective rate review programs going on across the country."

SAVINGS QUESTION

He did concede that the alleged $15.3 million in savings might be overstated. "I would admit that that figure-let's say it's a ballparkish kind of figure,' he said. "We could have saved even more if they asked even more money and we didn't even give it to them . . but the truth of the matter is that this is as good a figure we could dredge up to quantify what we have been able to accomplish in holding down the price tags of hospitals."

The committee has encouraged hospitals to share services and has acted as a catalyst to bring together hospital administrators to discuss mergers and to discourage purchases of unnecessary equipment. It has helped hospitals to develop better budget practices.

VIEW OF STATE ROLE

"The fact that the state wants to participate in the program is the demonstration that they think it has great promise and offers them a more visible opportunity to move into this arena than to start on their own and duplicate it," Suycott said.

State officials vigorously disputed this.

Durkin, who thinks the program has been relatively ineffective, is convinced that it was started in part to head off legislation for a state operated rate commission.

But only with great reluctance will boosters of the committee admit that. When Suycott was pressed, he said: "Oh, I don't know. I can't separate that out and say, 'No that wasn't anything at all.' I'm sure it weighs into any judgment decision that you're making of that character, but I don't believe I saw this as, 'Hey, let's do this or the state's going to take over.'

Von Ehren would not concede it was a factor.

Durkin summed up: "I don't think their track record here is very good. The committee hasn't been able to develop the standards needed to be forceful enough with the hospitals."

[From the Milwaukee Journal, June 2, 1976]

INSURERS' ADS ARE SOMETIMES QUESTIONABLE

(By Neil D. Rosenberg and David L. Beal of the Journal staff)

Despite periodic warnings from the State Insurance Commissioner's Office, Wisconsin Blue Cross and Surgical Care Blue Shield have used dozens of misleading, overstated and inaccurate advertisements and promotions for their programs in recent years.

In a 1975 audit of both organizations by the Insurance Commissioner's Office, 651 deficiencies were listed in various advertising and promotion programs on television, radio, in newspapers, proposal pages, brochures, booklets and even the Yellow Pages of the telephone directory.

Blue Cross officials have denied many of these claimed violations of the State Administrative Code pertaining to advertising.

But an examination of documents in the commissioner's office shows that Blue Cross officials have admitted to dozens of violations.

When first asked about these violations, Leo Suycott, president of Blue Cross, replied: "We, let's say, I don't think you saw anything in the audit that said we agreed (with their findings). We didn't agree these things were excessive."

But Blue Cross officials' own reply to the audit did agree that there were deficiencies, and officials said they would correct them. In a specific section of the audit, the state said: "The organization was advised by letter of the deficiencies noted. The deficiencies in current material should be corrected."

Blue Cross replied: "Advertising material will be corrected in accordance with Wisconsin Administrative Code."

When Suycott was presented with some specific examples of advertising that violated the code together with Blue Cross admissions, he admitted that there were some violations.

"Well, I think we certainly have (made some violations). We wrote back and said we did it," he said. "It is clear evidence. When we find a situation like that we correct it."

When asked if Blue Cross violated the code at times, Harold Wilde, state insurance commissioner, said: "Yes. We saw a lot of violations and are working with the company to clear it up.

"We are engaged in a followup procedure to see if they are following things up. If not, I think it will be very appropriate to seek civil forfeitures (fines) against them."

Blue Cross does all the marketing and advertising work for both Blue Cross and Blue Shield.

In the audit, the state said Blue Cross had:

Overstated coverage in a particular plan.

Overstated the advantages of being insured by Blue Cross-Surgical Care Blue Shield.

Overstated the extent to which Wisconsin residents are served by Blue Cross and Blue Shield.

Overemphasized a maximum benefit.

Did not identify source of statistics.

Did not adequately define pre-existing conditions.

Did not disclose or state all limitations and exclusions accurately.

Did not adequately explain references to reasonable and customary charges. Some of the violations admitted by Blue Cross in documents were:

A television campaign for its Medicare Extended policy, which the commissioner's office considered misleading advertising. The TV campaign was withdrawn.

The use of the word "comprehensive" in advertsiing the Medicare Extended policy. There were various exclusions and limitations in the policy, and Blue Cross agreed to delete the word.

A radio advertismeent on a family health care plan that did not identify Blue Cross or Blue Shield as the sponsor, as required by law.

Many booklets using the phrases "full payment" or "100 percent payment'' but later qualifying the phrases to say payments pertained to only covered serv

ices. "These terms have apparently been determined to be misleading and will be deleted in future booklets," Blue Cross said in a letter.

A television campaign for Compcare, a prepaid health program, claiming that all needed health care coverage was provided. Blue Cross changed the campaign after the commissioner's office said it was overstated.

For example, a statement in the campaign that all routine physicals were covered was not accurate, the state said. Blue Cross admitted in a letter that only an annual physical and only necessary medical care were covered.

In a lawsuit on a different matter, Blue Cross defined medically necessary care: "The fact that a physician may prescribe, order, recommend or approve a service or a supply does not of itself make it medically necessary or make the charge an allowable expense even though it is not specifically listed as an exclusion."

BIGGEST BATTLE

One of the strongest battles the commissioner's office had with Blue Cross was over a major advertising campaign, recently ended, in which the phrase "Serving More People Than All of the Others Combined" was repeatedly used.

The commissioner's office felt that this was misleading and inaccurate because persons might think that "serving" meant "insuring." Many of the violations cited in the audit had to do with the use of this phrase.

"We specifically use the word 'serving' rather than 'insuring' because we realize that we do not insure all of the Medicare and Medicaid portion of the state's population," Blue Cross wrote to the commissioner's office.

But by using the word serving, Blue Cross included Medicare and Medicaid recipients because it administers this program for the federal government.

At the time of the campaign, Blue Cross said it insured about 1.5 million people. By adding another million Medicare and Medicaid recipients, it justified the use of the slogan because then it did "serve" more than all other insurance companies combined.

Nevertheless, for months the commissioner's office tried to get the company to stop using the phrase.

"Even if we don't (serve more), and I still think we do," Suycott said, "what the hell did we do to hurt anybody by saying that? I don't think anyone was destroyed by that."

When asked if he thought the statement might be misleading, he replied: "What difference does that (make)? I think it is true. I don't think it is untrue. Where has it been proven that it isn't true? Consequently I am not all that impressed by that

concern.

REASON FOR CHANGE

"We stopped it. We pulled it out. We only did it because it was time to change the campaign anyway.'

Under pressure from the commissioner's office, though not admitting any wrongdoing, Blue Cross withdrew an advertisement from the Yellow Pages that said "Serving One Out of Two People in Wisconsin."

Correspondence in the commissioner's files showed that it frequently took months for Blue Cross to react and respond to charges of illegal advertising and more months before it agreed to withdraw questionable advertising.

LETTERS IGNORED

At times Blue Cross failed to reply to a first letter, and the commissioner's office had to send a second one to get a response.

Suycott was asked about these delays.

"Oh, God, I don't know. There are all kinds of reasons for that, I suppose. There are a lot of challenges and lots of arguments and lots of discussion."

He said that sometimes 10,000 booklets might have been printed for a company and the delay might have been caused by an attempt to keep from reissuing such a large number.

Exactly how much Blue Cross and Blue Shield spend on advertising is not known.

In its 1975 annual report filed in the commissioner's office, Blue Cross lists advertising expenses of $523,941.

But when queried on this, Blue Cross replied in a letter that in fact it spent a total of $534,336 for advertising in 1975. The firm said $412,415 was spent for media advertising and $121,921 for posters, flyers and brochures.

76-614-76

But the total does not include salaries paid to employes engaged in advertising or promotion work, travel expenses or postage incurred in such work, according to a Blue Cross official.

Blue Cross adamantly maintains that those other expenses are negligible.

"I had a meeting with the commissioner. I said there is one fine thing about our advertising. Anybody who bought our program because we advertised it, never got hurt by it," Suycott said.

[From the Milwaukee Journal, June 3, 1976]

SUYCOTT VIGOROUS IN DEFENSE OF THE 'BLUES'

(BY NEIL D. ROSENBERG AND DAVID L. BEAL OF THE JOURNAL STAFF) Leo Suycott seemed almost like a beleaguered general, pacing back and forth in his office, defending his strategy after a sudden change in the weather had forced his troops back to the trenches.

His carefully modulated voice rose and fell as he defended the empire he presides over, the biggest insurer in the state, Blue Cross of Wisconsin.

Suycott, 60, built his career on sales prowess. Joining Blue Cross in 1949, he led its sales efforts through the plan's early boom years, times when the Blue Cross record of ever larger sales volume each year helped convince just about everyone that the company was responding fully to public needs.

"I can remember, in my early years, we thought our role was to go out and sell some new business and bring in more customers to join," he said.

"But our role today has to be to work very hard and heavy in these cost containment areas, to produce a better value for the dollar. The primary trouble is getting people to sit still long enough to understand there is no simple answer. "We may not have the time or the patience. That's the problem."

Suycott is convinced that Blue Cross is doing a lot and will do more to stop surging health care costs without more state regulation, but state officials are less optimistic.

They see him responding to the new pressures on Blue Cross, but they don't see enough response.

"I think Leo Suycott is very serious about cost containment,” said one state official. "I'm not so sure he's achieving it."

"I don't think he perceives of himself as a public servant. When one deals with him, one does not get the feeling that he is representing the public."

Another source recalled the gossip being bandied about at a cocktail party several years ago, after Suycott and leaders of various other interest groups had wrapped up their work on the governor's health task force.

WHOLE EXISTENCE

"Someone remarked that Leo Suycott was the only one on the entire task force who never rose above his own interest position," this source recalled. "There may have been others on the committee like that, too, but I wouldn't disagree entirely with the comment, Blue Cross is his whole existence."

By several measures, Suycott figures largely in the Blue Cross apparatus, both in Milwaukee and nationally.

"He runs the show, there's no question about it," a state official said of Suycott's role at Blue Cross here. "His subordinates always say 'I'll have to talk about that with Leo.""

CHIEF SINCE 1963

Suycott has been president of the Wisconsin plan, the 15th largest in the United States, since 1963. He has also been active and influential in the Blue Cross Association, the national governing board for the 69 Blue Cross plans in the US.

State Insurance Department records show that Suycott receives far more in pay and benefits than any other of the plan's executives.

Last year, for instance, he was paid $85,348 in salary, plus benefits valued at $13,937. The next highest amounts went to the state plan's financial vice president, who got $52,867 in salary and $6,394 in benefits.

SUBJECT TO BOARD

A 1972 report from Blue Cross of Wisconsin, on file at the office, said Suycott's salary is the only one authorized by the plan's board, which is controlled by