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- 4

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

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.

SOLD WAR SURPLUS

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.

ON NATIONAL BOARD

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."

COMPLEX ISSUE

"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.'

OTHERS BLAMED

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.

LIFESTYLE COMMENT

"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.

NOT CONSULTED

"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. we're pretty damned good. In fact, I think we're better than anyone."

BLUE CROSS DROPS ERRING COMPUTER

(By Neil D. Rosenberg)

I think

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 BACKLOGS

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.

ANOTHER DELAY

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.

ADVANCES OFFERED

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]

"BLUES" FACE TIGHTER REGULATION

(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 overstat