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

DATE: FRIDAY, May 19, 1995                   TAG: 9505190070
SECTION: BUSINESS                    PAGE: A13   EDITION: METRO 
SOURCE: ASSOCIATED PRESS
DATELINE: RICHMOND                                 LENGTH: Medium

TRIGON TURNS PROFIT DESPITE REFUNDS, FINES

Refunds, state fines and other expenses to clean up the flap over excess charges billed to customers wiped out what would have been a sharp increase in profits last year for Trigon Blue Cross Blue Shield.

The expenses amounted to $36.4 million, the state's largest health insurer said in its annual report, which Trigon is mailing to policyholders this week.

Trigon's profits slipped to $93.3 million in 1994 from $116 million in 1993. The company had revenue from insurance premiums of $2.29 billion, up from $2.23 billion in 1993. It ended the year with an operating surplus of $653.6 million, up from $560.3 million a year earlier.

In a footnote to its financial statements, the company disclosed that state Treasurer Ronald L. Tillett had asked that all unclaimed refunds be surrendered to him, under the state's unclaimed property act.

``Our aim is to make sure whatever is out there that is owed is paid,'' Tillett said Wednesday. He said he did not ask for a specific sum.

At issue was a now-abandoned practice of calculating customers' shares of their medical bills without taking into account discounts Trigon had secretly negotiated with hospitals, nursing homes and other institutions.

While customers were told by Trigon that their co-insurance payment covered a set percentage of their medical bills, usually 20 percent, the old calculation meant they were billed for a much higher share of the actual charge for care.

The state Bureau of Insurance last year said the difference between what Trigon told its 1.7 million customers it covered and what it actually paid was so misleading that it violated state insurance law.

To settle that charge, Trigon agreed in September to pay a $5 million fine and to refund excess coinsurance payments to any customers who filed valid claims.

During the 100 days of the offer, between September and early January, Trigon received more than 163,000 claims for refunds. It set up a team to process them and hired a telephone answering service and mass-mailing firm to handle other paperwork.

Trigon spent more than $30 million on refunds and associated costs.

Without the expense of the co-insurance refunds, the state fine and other related costs, Trigon's profits last year would have risen by 14.5 percent from 1993 earnings, the company reported.

``Those are very strong results. They show this is a very strong company that will remain a player,'' said Todd B. Richter, a health care analyst at the Wall Street securities firm Dean Witter Reynolds.

by CNB