Blue Cross Blue Shield of North Dakota failed to send required mailing to 10K new customers

The company reported the missed mailing to North Dakota insurance regulators in September and is working to come up with a precise number of customers who did not receive the mailing, said state Insurance Commissioner Jon Godfread.

“We’re trying to get our arms around how big of an issue this is,” Godfread said. Because the missed mailing is required by insurance regulations, and provides basic consumer information about coverage, “That is a big issue for us.”

The lapse was caused by a problem in converting to a new software system, with settings that failed to recognize new members and trigger the “welcome kit” mailing, including a booklet explaining the policy’s coverage, said Jon Bogenreif, senior vice president of operations at Blue Cross Blue Shield of North Dakota.

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“They’ve corrected that issue,” Godfread said. “We haven’t received any consumer complaints.”

By the time the missed mailing was discovered, some new members were due to receive renewal notices, and Blue Cross Blue Shield administrators thought it would be confusing to send a benefits book that had become outdated, Bogenreif said.

The error occurred when the North Dakota Blues were switching to a new software platform, a complex transition that happened in phases over three years, he said.

Blue Cross Blue Shield kept regulators up to date during the move to the new software, Godfread said. For the most part, he said, the problems were typical of those encountered in switching to a new platform.

“I think you’re going to have bumps any time you have an IT upgrade,” he said, referring to information technology. “It’s a matter of managing the issues.”

Tim Huckle, who retired as CEO of Blue Cross Blue Shield of North Dakota at the end of 2019, announced in 2017 that the company would be outsourcing its software and paring down its IT staffing.

For years, Blue Cross Blue Shield of North Dakota had used software developed by its own IT staff. But the company decided that the time had come to adopt a system developed by HM Health Solutions, which Huckle called “proven in our industry” and the “best solution” because it offers a broad spectrum of services.

As of October 2017, the North Dakota Blues had 230 IT employees. Because of the software transition, 71 employees were transferred to Noridian Healthcare Solutions, a Fargo-based subsidiary that processes Medicare claims; five project managers were transferred to a business project management team; and 52 positions were not filled and eliminated through attrition.

Today, the North Dakota Blues have the equivalent of 102 full-time IT employees, according to the company. No employees were laid off in the staffing reductions, Bogenreif said.

“There’s been some pain points at Blue Cross” because of the technology transition, Godfread said. “I’m hopeful that this was a short-term, kind of a one-off transition problem. I don’t believe our consumers have been impacted.”

Nonetheless, Godfread said, a fine is possible. “We still have the option to take action.”

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