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SOUND FINANCIAL FOOTING, CLAIMS ACCURACY AND LOW ADMINISTRATIVE COSTS HIGHLIGHT INSURANCE DEPARTMENT STUDY OF INDEPENDENCE BLUE CROSS

SOUND FINANCIAL FOOTING, CLAIMS ACCURACY AND LOW ADMINISTRATIVE COSTS
 HIGHLIGHT INSURANCE DEPARTMENT STUDY OF INDEPENDENCE BLUE CROSS
 PHILADELPHIA, July 13 /PRNewswire/ -- "It is gratifying that State Insurance Commissioner Cynthia Maleski has concluded that the Blue Cross and Blue Shield Plans of Pennsylvania are on a sound financial footing," Independence Blue Cross (IBC) Chairman Robert H. Young stated this morning.
 "We agree with her when she says that our collective financial strength should be reassuring to the thousands of Pennsylvanians who depend on these insurers for health care coverage.
 "Equally gratifying is the fact that the Market Conduct Study indicates that just four cents of the total health insurance premium dollar is expended for administrative and marketing expenses at IBC," Young continued.
 According to the report, "...in the case of the examination of Independence Blue Cross, it is disclosed that more than 94 cents of every premium dollar is paid out to hospital providers for services provided to individual and group subscribers, with an additional two cents of that dollar being used by the company to process those payments."
 The report, one in a series of targeted examinations of the medical claims payment practices and administrative expenditures of the commonwealth's leading health insurance companies, is the result of an intensive examination of claims and administrative expenses between 1986 and 1990 conducted at the offices of Independence Blue Cross from Jan. 6 to 16, 1992.
 The claims review detected no improperly paid claims and no incomplete ones in a total sample of nearly 3,000 processed in the five- year period examined.
 "That's an accuracy level of 100 percent," commented Young. "Coupled with the 4 percent level of administrative costs, I would say that IBC does very well in the principal areas of examination, claims accuracy and overhead expense."
 The report did detect "exceptions" in the claims area, principally involving failure to acknowledge the filing of claims and provide status letters. Two recommendations for improvement were made in this area. Two other recommendations covered changes in financial reporting and subsidiary securities valuations.
 "We acknowledge and will comply fully with all four recommendations," Young stated. "We also want the Insurance Department to know that we have observed substantial positive changes in claims administration since 1990, the last year for which the review took place. In 1990, the average claims processing time for a local subscriber was 38.2 days as noted in the Insurance Department study; today it is 9.8 days. And the average payment time for a national subscriber was 30.1 days; today it is 13.8 days. That means we have experienced a 74.4 percent local improvement and a 54.2 percent national one in less than two years."
 Young noted he was als ?"pleased with the modest level of administrative expenses. Since 1990, the last year of the study, (IBC President and Chief Executive Officer) Fred DiBona has put together an executive team which has made substantial improvements in operations. Indeed the administrative budget which the Insurance Department found to be less than four cents on the subscriber dollar has been declining on a yearly percentage basis since Fred DiBona became president.
 "Significantly, in analyzing these expenses, not a single recommendation was made by the Insurance Department. With the introduction of Special Care for the uninsured, the Caring Program for Children and the continuing responsibility to meet the health insurance needs of individuals and groups without regard to medical underwriting and with maximum year-round open enrollment, it is more important than ever that IBC be businesslike and competitive.
 "We acknowledge the department's study as a helpful review which basically confirms our mode of operation while making constructive suggestions in the areas of claims notification and financial reporting," Young concluded.
 /delval/
 -0- 7/13/92
 /CONTACT: Dick Doran of Independence Blue Cross, 215-241-3131/ CO: Blue Cross and Blue Shield Plans of Pennsylvania; Independence Blue
 Cross; Pennsylvania Insurance Department ST: Pennsylvania IN: INS SU:


MK-LJ -- PH006 -- 8514 07/13/92 09:35 EDT
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Date:Jul 13, 1992
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