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OMIP settles with Regence at Long Last

Those dollars are coming out of OMIP's reserve fund, and it's unknown whether the other health insurers in the pool would have received that money had Regence not been successful. Check the story for more details.
June 2, 2015

Regence Blue Cross Blue Shield will receive a maximum of $7.1 million for billings to the Oregon Medical Insurance Pool that have long been in dispute, according to a proposal by OMIP’s board. It met May 28 to hear details of a Moss Adams audit of Regence’s billing practices. The insurer claimed last September that it was underpaid $10 million due to accounting errors.

The $7.1 million is coming from a reserve fund created by past OMIP assessments on health insurers, according to Stephanie Tripp, spokesperson for the Oregon Health Authority, who did not comment on whether these dollars -- had they not been given to Regence -- would have been returned to the other insurers who paid assessments.

In December, Regence was paid $2.1 million by the high-risk Federal Medical Insurance Pool, which was due to close its accounts last December.

With $8.5 million in disputed claims remaining at year’s end, the temporary high-risk pool was extended and the audit conducted. Francis Orejudos, senior manager at Moss Adams, relayed the results by speakerphone.

“We tested 210 claims at Regence from 2011 through 2014,” said Orejudos. “The dollars reviewed were $8.9 million. The accuracy was 99 percent-plus.”

There were two errors that were overpayments, one for dialysis and another for out-of-state medical expenses.

“Overall, it’s apparent from the results that Regence met or exceeded performance recommendations for the time period,” he concluded.

“I appreciate that level of detail,” said board chair Robin Richardson, a vice president at Moda Health. “I appreciate Moss Adams and Regence’s work on this. It’s comprehensive due diligence.”

After a closed executive session to discuss the findings, the public meeting resumed.

A proposed resolution was distributed by OMIP’s board, whose members include the major health insurers in Oregon, which agreed to set $7.1 million as a capped amount to be paid to Regence.

“There is an account, recently discovered, but the (reimbursed) amount, if anything, would be reduced,” Richardson said. Once Regence signs the agreement, no additional bills will be paid.

“This wraps up the OMIP program and the FMIP program,” Richardson added, telling Regence officials, “We’re ready to reconcile and get you the money. I appreciate the board’s work and attention to this. It feels like we crossed a major milestone.”

OMIP Called a Godsend

OMIP, created in 1989, was a godsend to consumers who were refused service by traditional insurers because of their high-cost medical claims and pre-existing medical conditions such as cancer. With the passage of the Affordable Care Act, insurance companies could no longer deny coverage.

Until the launch of Cover Oregon, the Federal Medical Insurance Pool was a stop-gap measure, acting as a high-risk insurance program. The program stopped operation a year ago, and the federal government closed the account Dec. 31.

Faced with that tight deadline, and the reality that OMIP had the option of giving Regence the money or returning it all to the feds, OMIP only ordered Moss Adams to conduct a sampling audit, which looked at a tiny fraction of Regence’s alleged outstanding claims.

Regence, which had been the administrator for the high-risk pool, had earlier agreed to pay for the extra staff time, the attorney fees for the Oregon Department of Justice and the audit. Some of its claims dated back as far as 2010.

Regence never paid any claims out of its own reserves, but would sometimes front expenses from an operating budget until it could be reimbursed from the pool’s general fund.

In an earlier letter to OMIP, Stacy Simpson, a vice president at Cambia Health Solutions, the parent company of Regence, wrote: “The items identified thus far consist of non-routine transactions such as claims adjustments, premium refunds and producer referral fees which were not included on system generated program invoicing reports.”

She added that the discrepancy was discovered when Regence was paying out claims for out-of-state medical expenses and medications and began to run low on operating funds.

At the same time, Regence’s spokesman Jared Ishkanian told The Lund Report: “OMIP and Regence are pleased to have a strong 20-plus year relationship, which includes processing $500 million in claims from 2011-2014 for Oregonians who required care. We are working collaboratively to ensure that the uncompensated funds discovered in the claims run out process are resolved as we conclude this program.”

Moss Adams was expected to be paid between $80,000 and $95,000 to conduct the audit.

Kendra Hogue is a Portland-based freelance writer. She can be reached at [email protected]. Diane can be reached at [email protected].