News coverage of the recent State Auditor’s “State Health Plan Risk Assessment” has included some information that is incomplete. BCBSNC values its relationships with both the State Health Plan and the State Auditor’s Office, and we believe discussions about how to improve efficiency within the Plan will be most effective if they are based on accurate, current and complete information. In that spirit, I would like to address some issues raised by the report.
Actual amount of potential overpayments and performance compared to industry standard
The report correctly states that Navigant identified $48.6 million in potential overpayments by the State Health Plan. The auditor’s report later says that the state should expect to receive $72-$120 million in annual recoveries. Obviously it would be impossible to achieve $72-$120 million in recoveries from only $48.6 million in potentially overpaid claims.
In addition, it is important to note that the $48.6 million (approximately one percent of claims paid) potential overpayment rate is one of those instances in which BCBSNC performs significantly better than the industry standards cited in the audit.
BCBSNC Profits from Errors
The report’s statement that “BCBSNC charges the Plan to collect on errors that BCBSNC made” for overpayments is misleading. It is important to recognize that overpayments and coordination of benefit payments errors can occur for many reasons – not only from claims processing, but also from provider or customer errors, such as billing errors by providers, retroactive termination of coverage, or a member failing to notify the SHP or BCBSNC that he/she has additional coverage.
It’s also important to know that BCSNC does not profit from the correction of these errors, rather there is a fee paid to vendors who specialize in investigating and recovering those funds. This practice is standard across the industry.
Lapse in Recovery Efforts
The report implies that there was a period in 2010 during which no recovery efforts were in place during a transition in vendors. In fact, our vendor contracts in place in 2010 and 2011 covered the entire service period, even during the transition.
State Health Plan's access to BCBSNC provider contract information
Finally, the statement in the report that “the Plan is at risk for overpaying medical claims because the Plan’s auditors do not have access to BCBSNC contracts and cannot independently verify that the Plan receives the proper contractual discounts from BCBSNC’s provider networks,” also is misleading. While it is true that the State Health Plan itself does not have access to the contracts, auditors (including staff within the State Auditor's Office) have had direct access to our systems to examine the amounts of the discounts.
BCBSNC is committed to State Employees
BCBSNC recognizes the importance of continuously improving its processes, including the overpayment and recovery rates, in order to ensure that our customers and state taxpayers are receiving maximum value from our products. With every audit, we take the opportunity to improve our performance, and, we have made numerous improvements in cooperation with the State Health Plan that address some of the concerns in the September 2011 report. For example, in 2010 we put new vendors and processes in place focused on recoveries. More recently, we added vendors who focus specifically on indentifying suspicious claims prior to payment. Unfortunately, the report does not reflect these efforts.