Another fine for Blue Cross

Health insurer fined $605K by state for violating network adequacy law

It’s unclear whether a $605,000 fine that the parent company of Blue Cross and Blue Shield of Illinois recently paid to the state for violating a “network adequacy” law will result in Springfield Clinic returning to the insurer’s preferred-provider network.

Between 55,000 and 100,000 central Illinois patients covered by Blue Cross plans lost in-network access to the clinic’s medical providers and other clinic services in November 2021 as part of a contract dispute between Blue Cross – the largest health insurance company in the state – and the clinic.

Thousands of Blue Cross-insured patients have had to transfer their care from their longtime physicians to doctors outside the Springfield-based multispecialty group or potentially face higher out-of-pocket health care costs.

Talks between the two sides appear to have stalled. Neither would talk about the status of negotiations when asked to comment on the state’s “market conduct exam” of Blue Cross’ statewide networks and the fine, both of which were made public March 9.

According to the Illinois Department of Insurance, Blue Cross paid the state fine after the department conducted the examination of networks from Nov. 2, 2020, through Sept. 28, 2022.

The state’s report documented several violations in the state’s Network Adequacy and Transparency Act. The insurance department said in its announcement that Blue Cross’ parent, Chicago-based Health Care Service Corp., “agreed to take corrective action based on the exam findings.”

Despite the departure of Springfield Clinic’s more than 650 doctors, physician assistants and nurse practitioners in 80 different specialties, the state’s evaluation didn’t say there was an inadequate supply of medical providers in Blue Cross’ networks in central Illinois or the rest of the state.

Blue Cross spokesperson Dave Van de Walle said in a statement that the insurance department’s findings “affirm BCBSIL’s belief that our networks offer our members adequate access to care across every Illinois county.”

But Springfield Clinic spokesperson Zach Kerker said the $605,000 fine, on top of a $339,000 fine Blue Cross received in March 2021 for failing to inform the state about the clinic’s removal from in-network status, “confirms that BCBSIL has a pattern of violating federal and state law.” Kerker said in a statement, “Our patients continue to be denied access to their trusted providers and have a right to the coverage for which they have paid.”

Some employers and individuals have left Blue Cross and switched to other insurers to keep in-network access to Springfield Clinic providers. The limited supply of specialists at other physician groups in the Springfield area has led to long waits for some former Springfield Clinic patients still covered by Blue Cross, Kerker said.

“Waiting six months or more to see a health care provider is unacceptable, yet it has become the norm for BCBS patients in central Illinois,” he said. “That’s why tens of thousands of patients have left BCBS to regain access to Springfield Clinic.”

Blue Cross’ parent company, Health Care Service Corp., includes Blue Cross plans in Illinois, Montana, New Mexico, Oklahoma and Texas. The corporation posted total annual revenues of $49.3 billion and profits of $1.46 billion in 2022, reflecting a profit margin of about 3%, according to documents filed with the National Association of Insurance Commissioners. HCSC posted total revenues of $45.9 billion in 2021, $44.1 billion in 2020 and $38.5 billion in 2019.

Van de Walle said Blue Cross officials worked with department officials “throughout the audit to resolve remaining areas of concern and develop plans to adjust some of our operational systems and processes. Market conduct exams are a normal part of doing business, and such exams are just one of the ways we actively work with regulators to ensure we are best serving the needs of our members.”

Department spokesperson Caron Brookens, in an emailed response to a request from Illinois Times for an interview, said, “The market conduct exam found no inadequacies in patient-to-provider ratios.”

Brookens said the exam did find that Blue Cross’ provider directories listed incorrect travel times in some cases. Directories are required to show consumers the distance to a provider based on a consumer’s ZIP code and how long it takes to drive to a provider, she said.

“As a result, the corrective action related to the provider directories will affect the entire state, including Springfield,” she said. “It includes corrective action such as updating provider directories and creating a new audit procedure for the provider directors to make sure that doctors listed as in-network are currently in-network.”

The market conduct exam began in November 2020, before the contract termination between Blue Cross and Springfield Clinic took place, Brookens said. After the termination, the examination of Blue Cross was expanded to review plan years 2019 through 2022, she said.

State Rep. Sue Scherer, D-Decatur, who has advocated for Blue Cross members who lost access to their doctors because of the contract dispute, didn’t return a phone call seeking comment on the state’s latest findings and fine. She represents the 96th District, which includes much of Springfield and parts of eastern Sangamon County and northern Christian County.

Scherer introduced legislation in 2022 that failed to progress in the General Assembly but that she said would have strengthened the state’s regulatory power over health insurance providers and reduced “ghost networks” of doctors listed in insurers’ network directories who aren’t accepting new patients.

Among other findings, the department’s market conduct review of Health Care Service Corp., said the company was “not meeting the statutory requirements in verifying the provider directories information via its audit process.”

The report is available online at