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hospitals throughout Wisconsin. Suycott himself okays all other officers' salaries, the report said.

To illustrate Suycott's importance, an insider describes an incident during the recent negotiations to bring state representation onto the hospital rate review committee set up by Blue Cross and the Wisconsin Hospital Association.

The negotiators had proposed to lessen the role of Blue Cross in the strengthened rate review committee, but Suycott heard about it. Very soon, Blue Cross won back full partnership. “It got back to Suycott, and he said ‘no way,'” the insider said.

Suycott's style is quiet, confident and deliberate. He is said to be a tough administrator.

His success in climbing to the top despite a personal handicap may have contributed to his confidence. Suycott was born with a shortened right arm, forcing him to do everything with one hand. Seven years ago he received a private pilot's license. He is a skier, too.

Suycott is a native of Pana, Ill., about 200 miles southwest of Chicago. He graduated from the University of Illinois, where he studied economics. He gained some of his early sales experience persuading railroad workers in downstate Illinois to buy loss of time insurance.


During World War II he was an administrative officer with the U.S. Army Corps of Engineers. When the war ended, he turned to selling again. This time, he was dispensing millions of dollars of war surplus equipment.

He worked for private insurers and as a manufacturer's representative before joining Blue Cross here as a salesman in 1949.

Suycott's initial sales were to small businesses that wanted group health insurance coverage. By 1954 he had become general sales manager for the entire plan. Eight years later he was elected president of the Sales and Marketing Club of Milwaukee.


After he became president of Blue Cross here, Suycott spent eight years—from 1966 to 1974—on the executive committee of the Blue Cross Association. He has been on the association's board of governors since 1963.

In a lengthy give and take interview with reporters, Suycott conceded a few points, stood firm on more and took the offensive on most.

Throughout the discussion, he showed flashes of what seemed to be a personal credo—that voluntary private sector efforts are invariably preferable to the government's becoming a “doer.”


"Personally, I think that health care is such a complex issue that people have looked for too many easy answers,” he said.

"I think the state can use the private sector system in a more efficient way, by not entering in the doing themselves. I haven't seen anything that the state has done when they move into the role of a doer that they have done well.

"I'm not at all happy with the big governmentese thing that we've developed in our country and I think the only way we're going to solve any of these damned problems is through making people voluntarily get together in a format in which they can solve their problems.


His comments followed a line of thought that underlines the difficulty most people have in trying to understand the nation's labyrinthian health care system. He was reluctant to hold his primary interest group, the Blue Cross plan, accountable for any of the health care cost increases. Look elsewhere, he suggested repeatedly.

He pointed the finger at a public lifestyle that constantly demands more and better health care services, at high labor costs at hospitals, at area health planning committees, at veterans' hospitals that pay unusually high salaries, at federal and state health programs and at politicians who promise too much.


"NOT OUR FAULT" "I'm willing to take it,” he said quietly, “but let's put some other fish in the pot, too, because they need a little cookin', too.

"We didn't bargain all those salaries up. We didn't do that. It's not our fault.” Hospitals face far greater labor costs than does business generally, he said.

What about the special nature of the Blue Cross payment system? It pays. hospitals and other health care providers directly for services to claimants, instead of reimbursing the claimants. Does this lessen concern about costs by making policyholders run too readily to the hospitals?

“Oh, I think that's true,” he conceded, but I can't sit here and say that it has been such a terrible thing for the country.


“There's one other side of this picture that we cannot control, which nobody likes to hear and you've seen it lately. It sounds like a copout, but it isn't. The costs of care have been controlled an enormous amount by the lifestyle of the public, the people themselves. And whether they're going to change it, or pay for it, I don't know.

Maybe we ought to set up our sights a bit on what is a reasonable amount of income to devote to health care.

Who do you think encouraged the building of those excess beds they now complain about? Was it the insurance industry? You'd find there was a HillBurton Act that said, 'Let's build all those hospitals around the state,' and we built a lot of them.


"We weren't the ones making the decisions. No one came to us. The community didn't come to us and say, 'Hey, Blue Cross, you mind if we build and do this and do that?' We had a financing obligation. That was our commitment.'

What is Blue Cross doing?

Suycott ticked off a list of Blue Cross cost containment programs. Review of hospital rates, two preadmission testing programs to cut down unneeded hospital use, two prepaid health plans, a home care program and shared computer services for hospitals.

"Now I've got a healthy respect for my friends in the business, but I must tell you that I think we're addressing with a damned sincere effort all these areas,” he said. “And I don't know of anybody that's doing any of those more than us.

"I know we're not as good as we can, as good as we want to be. I think we're pretty damned good. In fact, I think we're better than anyone."


(By Neil D. Rosenberg) Blue Cross has temporarily abandoned a new computer system used to reimburse pharmacies for Medicaid and Medicare drug sales because of monumental delays in repaying pharmacies and because hundreds of claims have been wrongly rejected.

A Blue Cross official admitted Wednesday that the system was stopped because of a variety of bugs and problems in it. He said it was hoped that the system could be put back in operation in August. Meanwhile, he said, Blue Cross has resorted to its old system, which also uses a computer but depends more on work done by hand.

One pharmacy was owed so much money that it had to take out a loan to meet expenses. James Schutkin, manager of Schutkin's Pharmacy at 1535 W. North Ave., said Blue Cross owed it thousands of dollars going back several months. He said that until a few weeks ago the pharmacy had some claims going back until January, when the new computer system was first begun by Blue Cross. The claims are still pending. Blue Cross handles fiscal matters for Medicare and Medicaid.


Other pharmacies also reported long backlogs in money owed by Blue Cross, as well as story after story about customers on Medicaid whose claims were rejected. because Blue Cross had no record of their eligibility.

Richard Knueppel, owner of the Knueppel Pharmacy at 8405 W. Lisbon Ave., said that Blue Cross owed him about $2,000 and that he too had pending claims back to January. He said he invested $1,000 in a photocopying machine so he could photocopy his customers' Medicaid identification cards to Blue Cross to prove they were eligible. Still some of the claims were rejected, he said.

An East Side Pharmacy spent $300 on a copying machine and also hired an extra clerk just to fill out the paperwork needed for the new Blue Cross computer system.

CLAIMED $2, SENT $22 In addition to lack of payments and rejected claims, another pharmacy, it was reported, put in a claim for $2 and was paid $22. When it submitted similar $2 claims later it was paid either 50 cents or nothing.

I. A. Zyduck, assistant vice president of government programs for Blue Cross, acknowledged that there were problems with the system. He said the rejected claims were due to a time lag in determining eligibility, a lag, he said, that might be a month or so.

He explained that a claim might be filed but that it would reach Blue Cross before it was determined whether the person was eligible. He laid part of the blame on the Welfare Department in getting the necessary information to Blue Cross rapidly.


But he said a shift from using a randomly selected identification number to the client's Social Security number was also boggling the computer and causing delays.

Another bug in the system was that it used a special code number for each drug, assigned by the manufactur, to aid Blue Cross in determining the price of the drug and making sure the pharmacy didn't over charge. But these code numbers change from time to time and it couldn't keep up.

“These changes caught us in a dilemma,” Zyduck said. “We had a monumental job trying to catalog these numbers and keeping an up to date pricing file."

The end result was that pharmacies were and still are not getting paid on time and many are finding themselves in a serious cash flow problem.


Blue Cross said in some cases it had agreed to advance money to pharmacies that are caught in this financial squeeze, based on pending claims.

Schutkin said the problem was compounded by a state freeze on prescription costs to Medicaid patients since 1974. “Together with the Blue Cross problem it's just murdering us,” he said.

"It's just terrible, terrible," said Knueppel.

Both Knueppel and Schutkin, as well as other pharmacists contacted, said they were considering dropping out of the Medicaid program if things don't get better.

"It's so much trouble, and so much hassle, ”Knueppel said.

[From the Milwaukee Journal, June 4, 1976)

(By Neil D. Rosenberg and David L. Beal) In the face of questionable cost control efforts, customer relations problems and their own dominance in the health care insurance field, Wisconsin Blue Cross and Surgical Care Blue Shield are coming under more public scrutiny.

New state regulation is on the horizon. Until now the Blues have been under virtually no regulation, except for certain disclosure requirements, occasional examinations and limited policy reviews by the State Insurance Department.

Under a new law signed this year by Gov. Lucey, the state insurance commissioner gained broad rule making powers that he can use if he feels the Blues aren't accountable enough.

And under an agreement reached this spring, the state ill join Blue Cross and the Wisconsin Hospital Association (WHA) on July 1 to strengthen the committee set up four years ago by Blue Cross and the WHA to review hospital rates.

The agreement is designed to give the committee more expertise and more muscle in weighing the hospitals' complex rate increase requests.

But some skeptics, including high state officials, doubt these changes will be enough to lasso the Blues. They complain that Blues officials are greatly overstating their success in controlling costs and are arrogant with the state and with customers.

They say the Blues should be quicker to recognize their limitations and to step back, allowing the state a greater role in containing the surging costs of health

Such views suggests that the Blues will be operating in a different regulatory climate in the days ahead.

On the near horizon, questions are likely to be raised about the merger proposal being considered Surgical Care and Blue Cross.



Surgical Care is in a much weaker financial position than Blue Cross. Blue Cross, with twice the claims load of the Blue Shield unit, had a statutory reserve fund about 35 times as big as Surgical Care's as of last Dec. 31.

This has led Blues observers to suggest that the merger plan is, as much as anything, a bailout of the Blue Shield unit and the doctors by Blue Cross and the doctors by Blue Cross and the hospitals.

Hearings on the merger, if pursued by the Blues, could come late this summer and could be controversial, according to one Blues watcher.


The State Insurance Department may well call other hearings, too. State Insurance Commissioner Harold Wilde and his aides are believed likely to propose hearings on what could become a string of rule making issues. Some possible questions: whether there should be more disclosure on advertising and promotional expenses and executives' benefits, whether to require a Blues plan to do more than simply notify the department when it proposes a rate increase, how to improve handling of customer grievances, whether the public has enough say in the Blues plans, whether the Blues are doing enough to contain costs.

Businesses being smacked with big rate increases by the Blues, and state officials who sense the political gains to be made by questioning the increases aren't likely to discourage such hearings.


Take, for instance, General Motors Corp., one of the state's largest employers with 11,400 workers. GM says its outlays for comparable Blues coverage in Wisconsin have risen nearly 30% in the last five years.

That's a smaller increase than GM has seen in many other states, but GM officials fear the increases here will accelerate, rather than ease up, in the months ahead.

Bernard Brown, personnel manager at GM's big assembly plant in Janesville, said the company may seek representation on the Blue Cross board to win more attention for GM's concern about health care costs.


Another new factor is the change in command at the State Insurance Department. The new commissioner, Wilde, is described as more interested in regulating the Blues than were his predecessors.

“Historically, the Blues have enjoyed a special status,” he said. “They have been insulated a lot from regulations. By virtue of their position, they must have - a high standard of responsibility.

The Blues contend they are doing a lot to hold down costs—they point to statistics that show medical service prices rising slightly less here than in the rest of the country. They point to moves, made or planned, to add more public board members.

RISE IS CONTINUING Surgical Care points to a four month freeze, lifted April 1, on physicians' fees. Blue Cross boasts of its rate review program.

However, statistics show that prices of medical services in Wisconsin are continuing to rise notably faster than prices generally. That breeds discontent.

Lucey, who appointed Wilde, is among the discontented.

"I think they may be doing all they can,” Lucey said of the Blues. "They have to consider that their constituency is.

"I think you have to take into account the fact that Blue Cross is in a relationship with the hospitals that does not permit them to impose the kind of tough cost containment that the situation calls for.

This view is not just Lucey's.

Blue Cross was started in 1940 by the hospitals, shortly after similar plans had begun in many other states. In essence, the plans filled the role of a bill collection agency for the hospitals, assuring for them the revenue they needed to keep going.

Later, as big worker groups won a lot of new health care benefits, the Blues plans grew explosively. Today, the three Blues plans in Wisconsin-Blue Cross ($212 million in claims), Surgical Care ($104 million) and a second Blue Shield plan, the Madison based Wisconsin Physicians Service ($107 million)-hold the lion's share of the business in the state.


Yet many believe the Blues are still operating primarily in the interests of the hospitals and the doctors.

One of the foremost critics of Blue Cross is Sylvia Law, a professor at New York University and author of the 1975 book, "Blue Cross: What Went Wrong?"

She has described Blue Cross plans as the "financing arm of American hospitals."

Ms. Law noted that the American Hospital Association owned the name Blue Cross and the Blue Cross insignia until 1972 when the association agreed to transfer ownership of both to the Blue Cross Association, a trade group representing Blue Cross plans. The two groups also eliminated their interlocking directorates.


Ms. Law quoted AHA officials who said the changes were a response to changing public attitudes but they did not represent a cooling off between Blue Cross and the AHA.

State Rep. David Clarenbach (D-Madison) charges that the Blues have not built enough public interest into their system. Clarenbach, who heads the Assembly subcommittee on health care and the consumer, held hearings on the Blues last year. He said he may hold more later this year.

Other legislators, unhappy because legislation to contain medical care costs was scuttled in the last session, also sense that the matter is becoming a more important issue.


Among these is Rep. Joseph Czerwinski (D-Milwaukee), chairman of the Assembly Committee on Health and Social Services. Czerwinski said the strengthened rate review committee should have a track record by early next year. If the record isn't good enough, he said, a bill to put rate review entirely in the hands of the state is likely.

Lucey and his aides are watching Ohio, where the Blues challenged a state insurance commission rule. They won in court, but legislators responded by writing the rule into the law books through legislation.

The Ohio law gives the insurance commissioner power to reject portions of a rate increase proposed by a Blues plan. Wisconsin's new law gives Wilde explicit power to reject fully a Blues rate increase, but such a move would be certain to draw a strong legal challenge. Wilde cannot reject a portion of a Blues rate increase under the new law here.


One state health care specialist termed the Ohio law a model because it requires the Blues to make a good faith effort at cost containment. The new Wisconsin law deals only indirectly with cost controls.

There's also a strong feeling that even the strengthened rate review committee won't be able to do enough to hold down costs.

The new role of the committee will be to develop standards for judging hospital rate requests.

Some examples of the issues to be confronted in drawing up the standards:

How much more sharing of equipment and services should hospitals be forced into?

Are depreciation accounting techniques allowing the hospitals to overstate their need for higher charges?

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