A U.S. Senate investigating panel last week grilled the national Blue Cross and Blue Shield Association's chief executive officer, Bernard Tresnowski, charging that the association had not done enough to police its members and had wasted government money.
Sen. Sam Nunn (D-Ga.), chairman of the Senate Permanent Subcommittee on Investigations, said the panel's investigation found "a very disturbing pattern*.*.*.*of poor management, extravagant expenditures and not enough interest in detecting healthcare fraud."
The hearings were the last in a series held by Mr. Nunn that have included reviews of the troubled West Virginia, District of Columbia and New York plans. The panel has been examining the state of Blues plans and other health insurers for about two years.
At one point, Mr. Nunn asked why it had taken the Blue Cross and Blue Shield Association so long to strengthen the oversight of member plans particularly in the wake of the 1990 failure of the West Virginia plan.
Mr. Tresnowski agreed that stronger controls were needed and listed actions taken in the past two years, including annual reviews of individual plans' compliance with the national association's financial standards and changes in the membership of local boards of directors.
The subcommittee questioned several association expenditures, which were financed in part by money the government pays the Blues for care of federal employees. The government pays a lump sum to the national association each year, which deducts its administrative expenses from the payment and passes along the rest to individual plans that provide care for the employees.
Items in the investigators' report included more than $500,000 in federal money spent in 1993 for a lavish conference in Atlanta that included concerts and musical productions by professional companies. A 1992 conference in Palm Springs, Calif., cost more than $667,000, of which nearly $580,000 was paid by the federal government.
In addition, more than $300,000 was spent on promotional items, paid for by the federal government, and sent to member plans in 1992. Items included coffee mugs with musical note handles, magnetic paper clip dispensers and magic coin banks.
The report also questioned the salaries of Mr. Tresnowski and other top association officials. In 1993, Mr. Tresnowski received more than $866,000 in total compensation, of which more than $274,000 was paid by the federal government. Any government worker who raked in that amount of federal dollars would qualify as the highest-paid federal employee, the panel's report said.
Mr. Tresnowski said he believed all the expenses were appropriate but added that the association had "taken a look at them and re-evaluated them.
"We think we can be more cost effective, and we've taken steps to reduce our costs," he said.