THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, July 20, 1994 TAG: 9407200581
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: WASHINGTON POST
DATELINE: RICHMOND LENGTH: Short : 43 lines
The state's largest health insurer is being investigated for widespread insurance violations, including kickbacks from hospitals, according to a report by Attorney General James S. Gilmore III.
Blue Cross-Blue Shield of Virginia, the dominant health insurer in Virginia outside the Washington area, allegedly negotiated fees so low for some medical procedures and services that its policyholders not only paid the entire cost but enough extra that some hospitals awarded a credit to the company with the leftover money.
Gilmore could not be reached for comment.
Ordinarily, a policyholder is expected to pay about 20 percent of the cost of services. For an item listed on the hospital bill as $100, for example, a policyholder is expected to pay $20.
But the report said investigators found that in some instances, Blue Cross bargained the fee down so low - say to $17 in that $100 example - that when the policyholder paid $20, the hospital kept its $17 and then passed on the remaining $3 to Blue Cross.
Jim Goss, a spokesman for Blue Cross-Blue Shield of Virginia, said that his company has not been contacted by either the attorney general or Insurance Commissioner Steven T. Foster and that it would be ``premature to respond.''
The attorney general's report, signed by senior assistant Gail D. Jaspen, said that Blue Cross handled about 1.1 million claims from July 1991 to January 1994 and that ``in most instances (Blue Cross) paid less than the amounts represented'' on its statements to policy-holders. Scrutiny of up to 135,000 of those claims turned up approximately 2,700 violations of state laws, according to the report.
The insurance company, which recently changed its name to Trigon, ``knowingly obscured benefits, coverages or provisions of its contract...with such frequency as to indicate a general business practice,'' the report said. by CNB