Minnesota Attorney General Mike Hatch accused Blue Cross and Blue Shield of Minnesota of using questionable accounting to "stockpile excess revenue" rather than reduce its premiums. In a seven-volume report, Hatch disputed the insurer's reported $639.9 million reserve for 2005, saying the health plan wrongly excluded $415.9 million in managed-care assets, foundation equity and additional reserves from the total. Colleen Reitan, the Blues' president and chief operations officer, defended the company's accounting and reserves. "Our levels of reserves are entirely appropriate for the size and nature of our business," she said in a news release.
Hatch conducted a yearlong review of the plan's consulting contracts, executive pay and perks, and business among affiliates. It was his fourth audit of a Minnesota not-for-profit healthcare organization. The attorney general credited the Blues plan with curbing travel and entertainment perks but questioned its consulting contracts, including a 10-year disease-management deal with American Healthways, Nashville. The contract began in 2001 and has cost the Blues plan $98 million to date. -- by Melanie Evans