Tuesday, July 20, 2004                                                         Contact:Lucas Hamilton

Strategy to Fight Fake Health Plans in Montana Announced Hospitals and Insurance Companies Join The Fight

      (HELENA) - State Auditor John Morrison joined today by John Solheim, President & CEO, St. Peter's Hospital, John Green, Vice President of Finance, St. Peter's Hospital, Jim Ahrens, President, Montana Hospital Association, Pat Aberle, CEO New West Health, and Tanya Ask, Vice President of Government Affairs, Blue Cross Blue Shield announced plans for fighting fake health plans in Montana.
      "Education is our best defense against fraud," said State Auditor and Insurance Commissioner John Morrison. "These fake health plans are stealing money from Montana business and employees, armed with useful information consumers can stop these scams from digging into their pocketbooks. I am pleased to be joined by Montana's insurance industry and hospitals to address this very important issue."
      The plan to fight fake health plans includes the following:

  • Continue to shut down illegal operations. The State Auditor's Office has already issued cease and desist orders on 15 companies and their agents. There are more than 45 complaints still under review as part of this ongoing investigation.
  • Work together with Montana's hospitals and insurance companies to build awareness about fake health plans. Together we can make more people aware of what to look for and who to call if they are suspicious. Blue Cross Blue Shield Montana, New West and Montana Hospital Association will be mailing their agents and hospitals respectively information on these scams.
  • Mail Montana's small businesses. Frequently, small businesses are targeted as they try to find affordable insurance for their employees. By warning them and telling them what to look for we hope to stop this problem, education is our best defense.
  • Introduce legislation. The "Unauthorized Transaction of Insurance" is a bill we intend to bring to the 2005 legislature that will make it a felony to knowing sell a fake insurance product.
  • Hit the road. The State Auditor's Office has received complaints from Sidney to Libby. We know the problem is far reaching and we will be traveling around the state and meeting with business owners and local health officials to educate them about fake health plans.
  • Build a national network of regulators through the National Association of Insurance Commissioners (NAIC). Most of these fake health entities operate across state lines, the network hopes by working together we can effectively shutdown these operations and get people's money back.
      Since the State Auditor's Office began addressing this issue through the media last month, our Policyholder Services Division has received over 50 calls from Montanans who have either bought or been contacted by a company selling fake plans.
      "By stopping these companies from selling fake plans in Montana one of the most important issues in the health insurance market is being addressed, cost shifting," said Jim Ahrens, President of the Montana Hospital Association. "When these companies sell these fake plans, not only does the consumer lose money, but also the hospital and all Montanans who pay insurance, because in the end it is those people who foot the bill." John Green, Vice President of Finance for St. Peter's Hospital added, "At a time, when we are all putting major resources into providing health care and insurance for those who need it, it is very troubling to see scam artists moving into health care to take advantage of that situation."
      In a recent study conducted by the General Accounting Office (GAO) it was found that 144 fake health insurers sold more than 200,000 bogus policies between 2000 and 2002 resulting in $252 million in unpaid claims. In the same time period it is estimated that the number of fake insurers has doubled.
      "Fake health plans are troubling to us," said Tanya Ask, Vice President of Government Affairs for Blue Cross Blue Shield. "These solicitations are very deceiving. They look like advertisements for health insurance, but offer things such as "all pre-existing conditions accepted", "no restrictions", "everyone accepted", "no health questions" and "no deductibles". They include typical insurance company terms, such as "individual and family coverage", "open enrollment", or phone numbers for businesses to contact their "group" department. And they issue membership ID cards that look just like an insurance company's. They are misrepresenting the insurance industry and victimizing the most vulnerable segments of our population." "They appeal to consumers by offering coverage for doctor visits, hospital visits, emergency room care, home healthcare, dental, vision, chiropractic, accidental death and dismemberment, prescription cards, and other healthcare services, often for around $100 per month," Pat Aberle, CEO of New West Health. "Those offers are just too good to be true. Unfortunately when people are desperate for insurance, they'll fall for these scams."
      Early detection and aggressive oversight are keys to successfully addressing this important issue. To avoid being a victim of a health insurance scam, STOP.... CALL and CONFIRM the company is licensed to do business in Montana.
      1. Verify, before you buy. Contact the Montana State Insurance Department to verify that the plan and agent are licensed in Montana. You can call the Montana State Insurance Department at 1-800-332-6148.
      2. Be Alert. If is seems too good to be true, then it is.
      3. Act fast. Typically phony health plans will not pay medical bills or will only pay small ones. If you find that your health insurance is not paying you medical bills in a timely fashion, call the Montana State Insurance Department. You need to call fast and report what is happening to you. Remember, it is better to be safe than sorry.
      For any questions regarding insurance please call the Montana State Auditor's Office at 1-800-332-6148.