Byline: Michele Conklin Rocky Mountain News Staff Writer
Blue Cross Blue Shield of Colorado owes the government $4 million in Medicare overpayments, according to an audit by the Office of the Inspector General.
Blue Cross is disputing the amount and hopes to meet next month with federal officials to negotiate the issue, said company spokesman Neil Westergaard.
At issue is whether the government overpaid a division of Blue Cross, Rocky Mountain Health Care Corp., for employee pension costs attributable to Medicare.
``This is one of several issues generated from the cessation of our contract with the government,'' Westergaard said. ``This involves the interpretation of some very complex rules.''
Rocky Mountain Health Care Corp. administered the Medicare program in Colorado for about 30 years. During that time, the government paid the company for any costs related to the program, including pension contributions for employees who worked on the Medicare contract.
Part of Blue Cross' contract was terminated in October 1994, with the remainder terminated in December 1995. After the contract was terminated, the government audited payments made to Blue Cross and determined that Medicare had overfunded the company's pension plan by $4 million, said Ron Solomon, a senior pension actuary with the Health Care Financing Administration, which oversees Medicare. That amount was derived through a series of several complex accounting and regulatory issues, but part of the problem arose because Medicare's pension contributions were based on a continued contract with Blue Cross, Solomon said.
``We will probably meet to negotiate,'' Solomon said. ``If we can't resolve it, it could wind up in court. But everybody would like to get this resolved as soon as possible.''
Westergaard said the company is hopeful the issue will be resolved without having to go to court. He also said it could be a lengthy process. ``It's not pay up or you go to jail at this point,'' he said.
A Denver-based health care consultant who specializes in financial issues said that the government's action is uncommon mainly because Medicare administrators don't often change. This case is very complex because it involves four or five regulations in addition to accounting methods and interpretations, said Dan Lounsberry with Lounsberry Associates after reviewing documents from both sides.
``It comes down to a matter of opinion,'' Lounsberry said. ``This may go to court to be resolved.. . . If Blue Cross ends up paying out 4 million bucks, that's big enough to hurt.''
Blue Cross last year recorded a loss of $23 million, its first loss since 1988. The company also is in the midst of trying to earn state approval to convert from a not-for-profit organization to a publicly owned, for-profit corporation. The public process to win the right to convert began in January 1997 and will continue through this year.
The process is now focused on determining the value of the company and how to transfer that amount to a not-for-profit foundation to serve the health care needs of Coloradans, a requirement of state law in order for Blue Cross to convert. Blue Cross recently was ordered by the state to bear the full costs of the conversion, which so far have come to more than $6 million.
