FOR IMMEDIATE RELEASE WEDNESDAY, JANUARY 18, 1995

CIV (202) 616-2765 TDD (202) 514-1888

BLUE CROSS BLUE SHIELD OF MICHIGAN PAYS U.S. $24 MILLION TO RESOLVE MEDICARE CLAIMS DISPUTE WASHINGTON, D.C. -- Blue Cross Blue Shield of Michigan today paid the United States $24 million to settle a lawsuit charging that it unlawfully billed the government's Medicare program for thousands of medical insurance claims that should have been paid from private insurance funds, the Department of Justice announced. Assistant Attorney General Frank W. Hunger, head of the Civil Division, said the settlement resolves a suit (United States v. Blue Cross Blue Shield of Michigan) the Department filed against Blue Cross under the Medicare Secondary Payer (MSP) laws in U.S. District Court in Detroit in 1989. "Congress passed the MSP laws to compel private insurance companies to assume a greater share of the nation's health care costs, particularly those of older workers and their spouses who are covered by an employer-sponsored health plan," said Hunger. "This settlement demonstrates the government's commitment to enforce these laws and protect the fiscal integrity of the Medicare system." MSP laws require private insurers such as Blue Cross to pay primary benefits in certain circumstances where a person has medical insurance under both Medicare and an employer health plan. For example, when a person aged 65 or older continues to work and receives health coverage through his or her employer. Blue Cross, a major private health care insurer based in Detroit, had contracted with the Health Care Financing Administration, the federal agency which administers the Medicare program, to manage the Medicare program in Michigan. HCFA has cancelled the Medicare contract with Blue Cross and named Health Care Service Corporation, an affiliate of Blue Cross Blue Shield of Illinois, to manage the Michigan Medicare program. An audit by the Office of the Inspector General of the Department of Health and Human Services found that Blue Cross paid thousands of dual-coverage claims from the Medicare Trust Fund rather than from its private insurance funds. Judge George E. Woods of U.S. District Court in Detroit had ruled that Blue Cross must reimburse the government for Medicare payments that Blue Cross should have paid although the size of the reimbursement had not been determined. "We are satisfied that the government received fair and equitable compensation from Blue Cross today," Hunger said. "We also want to point out that under today's agreement Blue Cross is required to share data with the government. This will result in significant future savings since that will enable us to process claims more efficiently." As part of the settlement, Blue Cross will share data with HCFA to prevent future Medicare overpayments and identify cases of duplicate payments to health care providers. The settlement resolves a longstanding dispute between HCFA and Blue Cross over the extent of the company's liability for such Medicare payments. ##### 95-029