Blue Cross of Minnesota paying $83K penalty over denied claims for sleep treatment

Blue Cross and Blue Shield of Minnesota has entered a consent order with the state Commerce Department after erroneously denying more than 8,000 claims for medical equipment and supplies used to treat sleep disorders.

The equipment and supplies in question were for a common sleep treatment called CPAP, short for continuous positive airway pressure.

The Eagan-based health insurer is paying a fine of $83,890, according to a settlement agreement posted by Commerce officials this month.

Blue Cross said it started working with a vendor on the problem — which involved a total of 8,389 denied claims — before being notified by state insurance regulators.

“The issue stemmed from a combination of code groupings that did not align with vendor guidelines, followed by providers billing Blue Cross for more than one month of resupplies in a single claim,” the health insurer said in a statement. “Our vendor has since made the appropriate system adjustments to have these claims go through as approved expenses.”

A Blue Cross spokesman said the vendor is called EviCore, a division of Connecticut-based Cigna that Blue Cross hired to handle medical necessity reviews and prior authorizations around 2019. At the time, the Minnesota Hospital Association complained to state regulators about Blue Cross payment delays and denials related to the vendor’s work.

In a statement this week, Blue Cross said the problem with paying claims related to sleep treatments did not cause any delays for patients receiving CPAP supplies. The issue was limited to payments owed to health care providers, the insurer said, adding that all claims have since been paid with interest.

The consent order says Blue Cross agreed to informal disposition of the matter without a hearing.

Blue Cross and Blue Shield of Minnesota employs about 3,000 people and brings in more than $8 billion in annual revenue, making it the state’s largest nonprofit health plan. It’s also the third largest nonprofit group in the state by revenue behind Mayo Clinic and HealthPartners.

This summer, a different state regulator sought a corrective action plan from Blue Cross after a federal report questioned whether the company failed to suspend payments to a health care provider as requested by the state.