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Regence Claims It's Been Underpaid $10 Million by High-Risk Pool

A large portion of the remaining account balance of the Oregon Medical Insurance Pool may end up in the pockets of Regence BlueCross BlueShield after the insurer alleged in a letter that accounting errors had shorted the company for expenses paid as it administered the program. OMIP chairman Robin Richardson has indicated he’d like a third-party audit to verify the account transactions.
October 1, 2014

The Oregon Medical Insurance Pool may have to pay Regence BlueCross BlueShield $10 million more than it expected after the insurer informed the OMIP board late last month about a number of previously unseen accounting discrepancies.

The $10 million discrepancy will likely result in the hiring of a third-party auditor, either through the Secretary of State or an independent third-party, who will examine records both from OMIP and Regence.

The high-risk Oregon Medical Insurance Pool ended its run at the end of 2013, but a temporary high-risk pool was extended for three more months through March 2014. Neither pool has been open to any new claims in the last six months, and, until now, the OMIP board hadn’t met since May.

But a Sept. 18 letter from Regence obtained by The Lund Report called the board together on Monday to discuss the accounting errors. Their meeting occurred largely behind closed doors in executive session and was shielded from the public record.

The discrepancies include claims for the Federal Medical Insurance Pool, a separate program that expired in June 2013. All claims for that program were to be processed by Tuesday while claims for the high-risk pool have until next April to be completed.

At the close of the meeting, following the executive session, OMIP Board Chairman Robin Richardson, a Moda Health vice president, called for staff to inquire with Secretary of State Kate Brown’s office about conducting a third-party accounting audit that would verify how much Regence is still owed.

“We’re asking staff to have a conversation with the Secretary of State about an independent audit to address our fiduciary responsibility with the closing out of the OMIP, TMIP and FMIP accounts,” Richardson said. Besides Richardson, the OMIP board is largely made up of executives from Regence’s competing insurance companies, including Providence Health Plan, PacificSource and Health Net Health Plan.

Throughout its tenure, Regence acted as the insurance claims administrator for OMIP, which provided medical coverage for people who had been rejected for coverage because of pre-existing medical conditions such as cancer, HIV infection and heart disease. The money to cover their insurance costs came from a complex blend of federal funds, premium taxes charged on Oregon health insurers and the relatively high premiums paid by the people receiving insurance.

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 her 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.

“The cost of any audit that was ordered would come from the operating fund of OMIP,” said Don Myron, although he conceded that the board may decide that some of the cost of the audit should be recouped from Regence.

In a follow-up email, The Lund Report attempted to get Myron to clarify the situation and explain where leftover money in the OMIP account would go after all claims are paid, but questions to Myron were redirected to Oregon Health Authority spokeswoman Alissa Robbins, who wouldn’t respond to our questions.  

“We will be doing a thorough review of the billing and then determining next steps,” Robbins said.

On Monday, Myron had said it was possible the OMIP board will meet again before its next scheduled meeting at the end of October to decide the best method of conducting an audit.

Robbins also sent a joint statement with Regence’s spokesman Jared Ishkanian :

“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.”