The U.S. Labor Department is investigating at least 40 of the nation's Blue Cross and Blue Shield plans for possible federal violations in the administration of self-insured health plans.
It's one of two fronts on which Blues billing practices are being questioned.
Neither the department nor the Blue Cross and Blue Shield Association would discuss the nature of the inquiries. However, Blues spokesmen said the department "routinely" audits Blue Cross plans and other third-party administrators for compliance with the federal Employee Retirement Income Security Act, which governs self-insured plans.
"We believe in many instances the Department of Labor has concluded there appears to be no problem," Blue Cross spokesman Chris Molineaux said.
The inquiries may relate to the practice of negotiating discounts with providers and not passing the savings on to a self-insured plan, often an employer. In April, the department announced a settlement with Blue Cross and Blue Shield of Memphis (Tenn.) and its subsidiary, Advanced Insurance Services, which allegedly negotiated secret discounts with providers and pocketed the savings. The Blues and Advanced agreed to reimburse 13 self-insured plans for discounts received from 1988 to 1992 and pay a 20% penalty.
Another issue is some Blues plans acknowledged the practice of negotiating discounts with providers that aren't passed on to patients.
Last month, Virginia Attorney General James S. Gilmore III wrote a letter urging the state's governor not to renew Blues contracts until an investigation into "deceptive or other unfair practices" is complete. And last month, a U.S. Senate investigations subcommittee concluded that "millions of dollars have been wrongfully withheld by the Blues system" from federal employees. Blue Cross has since changed its policy to base copayments for federal workers on negotiated discounts.
Suits have been filed by Blues subscribers in at least four states. In Ohio, at least three lawsuits are pending on the copayment issue, including one filed last year by University Hospitals of Cleveland against Blue Cross and Blue Shield of Ohio. On Aug. 12, a subscriber sued 22 Cleveland-area hospitals that contract with Blues plans.
Thomas Onusko, counsel to the Greater Cleveland Hospital Association, said the suit against the hospitals, filed in Cuyahoga (Ohio) County Common Pleas Court, is misdirected. He said copayments are "dictated by the contract between the hospitals and Blue Cross ....Ultimately, this is a dispute between subscribers and Blue Cross."
Spokesman Dave Buckel said Blue Cross passes on discounts through lower premiums. But the attorney who filed the suit, Edward Cochran of Cochran & Cochran in Streetsboro, Ohio, said the practice shifts costs to patients requiring the most care.