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Blue Cross Transaction Fees Go To Court in Michigan-Contracted Administrator Services-Algorithms For “Self Insured”

Posted Mar 02 2011 11:31am

It seems we are beginning to dig in to those transaction fees that are charged on medical claim processing and it may not be an easy one to understand and get to the bottom on some of these.  When a medical claim is processed, it is run image through several software algorithmic programs to look for various items on the claim to scrub and verify for the insurance company that information submitted is accurate.  You could and sometimes do in fact have many and each pays a fee, transactions to verify the information.  This seems to be the case here where Blue Cross, who has the IT infrastructure to do this that most government agencies lack to include Medicare is contracted to do. 

As mergers and acquisitions continue to take place in healthcare we could and will probably see more conflict of interest cases appearing, as the old companies just are not what they used to be with subsidiaries bringing in profits from IT infrastructure which may or may not be related to processing claims.  Do they pocket these fees?  That remains to be seen but if one insurance company processes the claims and then uses a subsidiary company for some of these transactions too, well you get the picture.  It does put more profit to the corporate bottom line and this appears to be what this case is all about. 


Yes I beat everyone over the head that reads here with this fact and it’s what determines where the money goes so to not address and sit in denial of this fact doesn’t get you anywhere.  Look what it did for big business on Wall Street if you don’t quite get it.  Just yesterday, finally, Congress is looking into this matter for clarity and it had gone on for years and to get to the bottom, we have to dissect the algorithms to see the design and how it works, and further more, how it reacts and works with other transaction algorithms. There’s no problem with getting paid for services rendered here, but it keeps feeding itself as a domino effect with one algorithm creating yet one more case to add another transaction algorithm and then one day you look and wonder how did all this happen? The link below offers a few more details about how some of this gets started, and this is why government health IT expansion is so important right now as we are some what beyond the point of having someone say “trust me”, sad but true. 

Insurance companies are used to manage both government and private industry insurance claim benefit plans, again providing the IT services to process claims and ensure everything submitted is correct and paid appropriately for “self insured” entities and that is the case here.  So when you hear “self insured” someone has to be running the processes and again insurers with their extreme IT systems they have built over the years get the contracts to do this versus the company or government entity setting up an “in house” operation for all of this.  My hopes are that they can in fact find a jury that is tech savvy enough to comprehend how all of this works with tech and algorithms for payments and auditing.  BD   

A jury this week could decide how much a medical insurance company owes Calhoun County for collecting hidden fees.

Five men and two women began hearing testimony Tuesday in the case of Calhoun County vs. Blue Cross Blue Shield of Michigan for what the county alleges is more than $2 million in fees secretly collected since the early 1990s.

The state court suits -- which already have cost the Blues several million dollars in verdicts and settlements -- are independent of an antitrust lawsuit filed last year in federal court by the U.S. Justice Department.

Although the focus of the federal suit differs, the lawsuits all contend that Blue Cross' business practices resulted in unfair and higher costs to others.

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