TYPICAL COMPLAINT

So what happens? A typical complaint comes from a woman in Sheboygan. At issue was $23 that Blue Shield would not pay because the charge was above the usual, customary and reasonable fee adopted. In this case, it was treatment for a broken foot.

"Their main argument against paying the bill is that the fees were not usual and customary. That is obvious because Dr. is a specialist in the field," she wrote the Insurance Commissioner's Office.

She clearly did not understand the system, because it has nothing to do with the doctor's specialty or background.

For 16 months she wrote letters and called Blue Shield to get some response. Finally after she complained to the commissioner's office, she received notice that her complaint would be put into the hands of one of Blue Shield's Medical Review Committees.

Meanwhile, she kept getting reminders notice from her doctor to pay the bill and finally threats to turn it over to a collection agency.

"Your account balance is well beyond our usual credit policy," one said. "If we do not hear from you at once, your account may be considered for a collection agency.'

The Medical Review Committee tries to make a final determination on whether to pay the excess charged. If it still decides it is out of line, then Blue Shield will not pay.

DEFENSE POLICY

What it says it will do is stand legally behind the customer-that is, defend the customer if the patient is sued for the bill.

But that just doesn't happen. Blue Shield officials admit that they could not remember when they last went to court to defend a subscriber.

Instead, they admitted, either the doctor gives up billing for the extra fee or, more often, the customer gives up under the threat of dunning notices and pays it.

"We can't prevent them from billing the patient," Thomas Girard, president of Blue Shield said. “We don't like it. We know it is very disconcerting to the patient."

SUIT REQUIRED

Can or will Blue Shield officials step in and get a court injunction against the doctor? No way, Girard said. So unless a patient is sued, officials will take no action to get the doctor off the patient's back.

This is, of course, all on the premise that the patient did not agree beforehand to pay above the usual and customary charge. If the patient did, all bets are off, and Blue Shield will do nothing to represent or protect the subscriber.

Doesn't such a system encourage a patient not to discuss fees and thus eliminate one small measure of control on costs? Not really, Girard said, contending that most procedures are not elective and thus there is little time to discuss the fee in advance.

Regardless, he suggested that all patients discuss fees. If the doctor is going to charge more than Blue Shield will cover, then the patient has an option of paying the fee or going to another doctor, he said.

Does Blue Shield perceive a large degree of confusion with such a system? "I can't agree more," Girard said. "We are trying to educate our subscribers more. I agree it is a problem. We are always trying to upgrade our booklets. We have recently hired a public relations firm to help us with that."

SOME CONFUSION

Yet another problem is that subscribers think that Blue Cross and Blue Shield are one and the same. Thus many call or visit the wrong organization with a problem.

"I lament that," said Leo Suycott, president of Blue Cross. "I think that is pathetic."

A proposed merger of the two organizations and a combined customer service department would solve that problem, Suycott, said.

Unlike Blue Shield, Blue Cross doesn't have hospitals harassing patients or getting after them all the time, Suycott said. "Customer service is tough,' he said. "It's a big, big problem. It's an ongoing matter as we expand and grow.'

[From the Milwaukee Journal, June 1, 1976]

STATE DOUBTS INSURER'S RESOLVE ON HEALTH COSTS

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

State government clout is being injected into a nongovernmental program to control soaring hospital rates because Blue Cross and state hospitals haven't been able to make the program work well enough.

Blue Cross and the Wisconsin Hospital Association (WHA) began the program, operated by the Wisconsin Hospital Rate Review Committee, in October, 1972. Since then Blue Cross and the WHA claim that the committee has shaved $15.3 million from hospital rate increase proposals. But even a top Blue Cross official admits that figure might not be totally accurate.

Nevertheless, the $15.3 million is only 7.7 percent of the $199.9 million in rate increases granted by the committee in a slightly shorter period.

TOTAL INCOME

Put another way, the $15.3 million is less than 1 percent of total hospital revenue of about $2.2 billion during the lifetime of the committee.

In the last two years, average daily charges-that is, the amount charged to a patient including room and all other services except doctors fees-increased 28 percent statewide.

WHA says the average of all hospital charges has increased about 22 percent in the last two years.

Blue Cross was asked to provide rate increase statistics for a few Milwaukee area hospitals but refused.

A sample of some rate increases provided by hospital spokesmen and other sources include: St. Joseph's 30 percent in the last two years; St. Luke's 28 percent since Feb. 1, 1975; St. Francis, 23 percent since June 1, 1975; Mount Sinai, 23.8 percent since 1974; Columbia, 27.8 percent since July 1, 1974; St. Mary's, 22.6 percent since 1974, and Waukesha Memorial, 80 percent since 1970.

SAVINGS ACKNOWLEDGED

Critics, including some high state officials, agree that the program has led to some savings, but not enough. They cite many weaknesses in the program. Nearly a fourth of the rate increases have been "conditional" meaning that the hospital must eventually show that it has lived up to the requirements laid down by the Rate Review Committee.

Yet Blue Cross and WHA officials admit that the committee frequently didn't check back to see if the conditions were met. That finally changed Jan. 1, when the staff first began providing regular reports on the conditionals.

No hospital having a conditional rate increase has had it pared.

Reporters were not allowed to take copies of budget data from the meetings until April. After Blue Cross was asked to change that policy, its officials said it was up to the WHA. The WHA later said it was up to Blue Cross. Somehow, the ban mysteriously was lifted, with neither side taking credit.

Members of the committee were not allowed to get any advance budgets or information on proposed rate increases until the day of the meeting. Since the committee members can face up to 30 rate requests at a meeting, a Blue Cross official admitted that this sometimes hampered members in making decisions. Meetings were recorded on tape, but no minutes were published or given to committee members.

"Nobody ever asked for it" rate review officials said.

FIVE REQUESTS DENIED

Only five rate requests were denied by the program in its four year history. Of 602 rate requests, 57 were withdrawn just before committee action. But virtually all were resubmitted eventually, and each hospital got a sizable portion of what it originally was going to request.

Some hospitals were granted more than one rate increase a year. That has been changed recently so that only one increase is allowed per year unless there are mitigating circumstances.

While Gov. Lucey has voiced some support for rate review from time to time, he has shunned an out and out endorsement of the committee and has spoken critically of it in a recent interview.

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