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BCBSNC overpaid $49M in claims, didn't try to recoup funds

Blue Cross Blue Shield of North Carolina inefficiently handles fraud recovery efforts for North Carolina's State Health Plan, causing the insurance plan for state employees and retirees to overpay $49 million in medical claims over the past three years, according to a state audit report released this week.

State auditors found that overpayments were caused by such problems as making duplicate payments for the same service, paying for people not eligible for coverage, and paying for inappropriate or unnecessary services. The plan also paid benefits when Medicare or another policy should have paid all or part of the bill first, reports the News & Observer.

Making matters worse, the auditors' report says BCBSNC, which administers the State Health Plan, hasn't taken actions to recoup those overpayments, alleging the insurer's fraud recovery efforts are "well below industry standards" because the health plan recovers only 10 cents for every dollar spent on pursuing overpayments, WRAL reports.

Auditors also discovered some redundancies in BCBSNC's contract. The plan pays BCBSNC 22 percent to 24 percent of the amount recovered to collect on the payment errors the insurer originally made, according to the Winston-Salem Journal. "In other words, Blue Cross charges the plan to collect on errors that Blue Cross made," the report said. "Failure to take appropriate action to prevent future errors will result in additional overpayments and recovery costs for the plan."

In respose to the report, Interim Administrator Lacey Barnes said the State Health Plan is working to improve oversight of its BCBSNC contract and better identify and correct overpayments, notes WRAL. BCBSNC spokesperson Lew Bowman said the report was outdated in some areas, for example, by not reflecting changes the insurer has made with its vendors and software tools to better track claims. He added that the plan was overpaying much less than the industry standard, notes the Journal.

To learn more:
- view the state audit report (.pdf)
- read the News & Observer article
- check out the Winston-Salem Journal article
- see the WRAL article

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