News in brief - July 25, 2005

California fines Blue Cross - TennCare signs online records deal - HealthSouth names new directors

California fines Blue Cross

California regulators on July 5 fined Blue Cross of California $150,000 for overcharging about 45,000 members by $12 million in premiums. The overcharge resulted from a computer glitch that caused the insurer to charge the affected members' credit and debit cards up to five times each in April.

The California Dept. of Managed Health Care imposed the fine because it found that the insurer's computer system had insufficient safeguards to prevent and detect overcharges. It also found that Blue Cross failed to inform regulators and the public about the problem in a timely manner.

Blue Cross, which has refunded its members, is not contesting the fine. The WellPoint-owned plan also is required to pay all interest and related fees or costs, such as time off from work and insufficient funds bank fees, that its customers incurred. The state agency also ordered the plan to take steps to improve its automatic billing process to prevent a reoccurrence.

TennCare signs online records deal

On June 29, Tennessee signed a contract under which Shared Health, a subsidiary of the state's Blues plan, will digitize the health records of TennCare patients as part of an initiative to improve patient care, reduce fraud and lower costs.

Under the initiative, physicians will be able to access, over the Internet, records of patients enrolled in Tennessee's troubled Medicaid program. This will give access to data that will help avoid medication errors and duplication of tests and procedures. BlueCross BlueShield of Tennessee is the largest insurer participant in TennCare, the state's Medicaid-like health plan.

HealthSouth names new directors

HealthSouth Corp. has named two new directors to its board, banking on their corporate governance, compliance and management experience to help the embattled outpatient services company recover from its woes. L. Edward Shaw Jr., and Donald L. Correll joined the board at the beginning of July.

Shaw has experience in litigation and regulatory matters. He is a counsel in the New York office of the global law firm Gibson, Dunn & Crutcher LLP, and an independent counsel to the board of the New York Stock Exchange.

Correll has 25 years of executive management and financial experience. He is president and chief executive of the water services company Pennichuck Corp., based in Merrimack, N.H.

HealthSouth continues efforts to recover from a $2.7 billion accounting scandal that resulted in a management shake-up, several lawsuits and financial setbacks.