
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, August 12, 1994                   TAG: 9408120105
SECTION: VIRGINIA                    PAGE: B3   EDITION: NEW RIVER VALLEY 
SOURCE: Associated Press
DATELINE: RICHMOND                                 LENGTH: Medium

VIRGINIA ADVISED TO DELAY TRIGON CONTRACT

Attorney General Jim Gilmore said Thursday that Virginia should hold off renewing a contract with the state's largest health insurer because his office is expanding a probe into its billing activities.

In a letter to Gov. George Allen, Gilmore said the state should not accept the bid being submitted by Trigon, until recently known as Blue Cross-Blue Shield of Virginia, until concerns about its activities are resolved.

Gilmore said the investigation, which began this past winter amid allegations that Trigon had negotiated discounts with hospitals without passing on the savings to policyholders, has expanded to include the Key Advantage program that serves state employees.

Gilmore said last month that a preliminary investigation had uncovered many instances in which Trigon negotiated fees with hospitals so low for some services that its policyholders paid their entire costs and then some. Some hospitals then awarded a credit to the company, the investigation found.

Gilmore said similar problems may exist in the Key Advantage program.

``I am concerned that the commonwealth's employees who are covered by Trigon's Key Advantage program may have been subject to deceptive or other unfair practices,'' the letter read. ``Further, I am concerned that the commonwealth may not have received the full benefit of its bargain from Trigon.''

Gilmore also said the probe was being expanded into the activities in Northern Virginia of Blue Cross-Blue Shield of the National Capital Area.

Trigon is accused of breaking state laws thousands of times from July 1991 to January 1994. State authorities say penalties could bankrupt the insurer, because each violation could result in a fine of up to $5,000.

When Gilmore commented on preliminary findings of a concurrent State Bureau of Insurance investigation of Trigon last month, the insurer denied that it had engaged in any illegal or unethical activity. Trigon did not immediately respond to a request for comment Thursday.

Gilmore spokesman Mark Miner said more than 87,000 state employees are enrolled in the Key Advantage plan. Trigon has a total of 1.8 million policyholders.

The state Department of Personnel and Training is considering the Trigon bid, Miner said. He said he did not know the timetable for awarding the contract.

Gilmore's letter said he wants the bid coordinated with his office before it is finalized, but he hopes the process is not delayed by the investigation.

Memo: shorter version ran in the Metro edition.

by CNB