Two Blues plans agreed late last week to pay hefty settlements to resolve allegations that they overcharged patients or the Medicare program.
First, Blue Cross and Blue Shield of New Mexico agreed to pay $2.2 million to subscribers in two class-action lawsuits whose copayments were based on list prices charged by hospitals rather than discounted payments it actually paid to hospitals.
The first New Mexico suit covers the period from 1989 through 1992 and involves $1.5 million. The second suit covers the period from 1993 through the first quarter of this year. It involves about $700,000 in payments to subscribers. In addition, the plan, which is managed by Rocky Mountain Health Care Corp. of Denver, will pay as much as $250,000 in fines and other penalties.
In the second settlement-this one with HHS' inspector general's office-the Arkansas Blues has agreed to repay at least $1.2 million in charges to Medicare.
An audit of the Blues plan by the inspector general's office found that between October 1988 and September 1994 it overcharged Medicare $834,586 in Medigap claims-processing fees.
The Arkansas Blues processes claims for all Medicare in Arkansas and for physicians visits in Louisiana. The audit also said the insurer charged the government $228,396 for "excessive executive compensation costs."
In 1990 the Arkansas Blues billed Medicare $1.1 million to cover 12 executives' salaries and bonuses. By 1994 that amount was $1.5 million, which the government said was too large an increase. Adding in other overcharges, the auditors said the Blues should refund $1.4 million. The two sides are negotiating a final settlement figure.