New audit shows that state employees pay for Blue Cross CEO, travel, corporate sponsorships, etc.

Under intense public pressure the State Health Plan hired an independent auditor to examine its contract with Blue Cross and Blue Shield of North Carolina. The agreement with Blue Cross uses “cost plus” accounting. Basically, the SHP paid Blue Cross what it costs to administer the plan plus an additional amount. This audit helps explain the “plus” part.

Read the entire report here.

The SHP asked the auditor to help uncover whether or not Blue Cross is charging the state for “disallowed” costs. The trouble, according to the auditor, is that the Blue Cross contract allows the insurer to charge the SHP for nearly anything.

So, what, according to the auditor, is included in the “plus” part of the contract? Tons. Here is a sample: Board fees/retainers, board retreats, meeting expense –food, corporate promotional expenses, corporate sponsorship, external audit fees, travel, chief executive officer, corporate projects, corporate capitalized labor (no idea what that is), law (that’s specific), e-Business, fringe benefits, and on and on and on.

But Blue Cross refused to help the SHP save money when the state was in crisis. And state lawmakers refused to make any public demands of Blue Cross. Instead, state employee premiums are increasing and workers face the prospect of random smoking tests and a fat tax.


  1. Rob Schofield

    February 16, 2010 at 5:02 pm

    Sounds like BCBS is a good candidate for a fat tax.

  2. Ann Remington

    February 17, 2010 at 9:08 am

    Speaking of the fat tax….why in the world would we agree to a contract that states that if you are overweight you can not purchase the 90/10 plan but you can if your healthy??? If I am healthy, I don’t need the 90/10. If I am overweight and need treatment to get healthy, don’t make it harder. Seems like this had no benefit for any of the employees and was an absolute win-win for Blue Cross. p.s. God knows I don’t want to be overweight. The stress of our jobs, the stress of increase medical costs (one of my medications has gone from $40 to $300 per month, without it I can’t work) and decreased benefits, stress of watching folks in our community struggling to survive, etc has had a huge effect on me and my co-workers.

  3. ewins

    February 17, 2010 at 9:22 am

    Can anyone name any company out there that doesn’t include all the named items in the report in their own pricing of goods and services? Whatever the State paid for that report was a complete waste of taxpayers money. When you buy a car, does the company say, “hmmmm, let’s not include the food costs that we had served in the all day sessions to train the mechanics to repair the car?” Does the State buy John Deere tractors? Does the Sate buy Fords for State Troopers cars? You can take the same headline up top and put in John Deere, Ford, or any other company’s name whose product the state buys. Come on folks, read the report from the link, but as you’re reading it, replace the company name and think about what a stupid point they’re trying to make. Maybe the SHP wants every comapny it deals with to lose money just like they do because they don’t know how to run the business efficiently.

  4. Adam Linker

    February 17, 2010 at 9:59 am

    Missing the point, ewins. Of course overhead is built in, which Blue Cross would factor in during the bidding process. Oh, wait, this was a no bid contract. OK, so Blue Cross would explain why it needs to charge a bit more per member per month to account for overhead. That’s not what happened here.

    Instead the SHP allows Blue Cross to directly charge them for things like food and travel even after those expenses have been calculated into the base payment rate. This is an additional payment to Blue Cross that Blue Cross does not have to explain or justify. And there is no cap on what Blue Cross can charge.

    You are right the the people running the SHP don’t run it efficiently. And this contract is part of the problem.

  5. Adam Linker

    February 17, 2010 at 10:01 am

    Ann, no one can buy the 90/10 plan — that’s been canned. Now the default plan is 70/30 and you can earn your way to the 80/20. But your point is still valid.

  6. Torrent Se

    June 25, 2010 at 12:11 pm

    You know, I’ve came to the conclusion that medical sphere is business long ago. I’m sure there is better madicine from almost all diseases but this sphere has to make money on you. To tell the truth it was a great discovery for me that a person with cancer diagnosis lives approximately for a year and a half without any medication. With medicines the person lives the same period. Isn’t it strange? Well, try to find your own medicine which will demand some efforts but not a lot of money.

  7. PAUL

    August 7, 2010 at 2:38 pm

    As a Capital BlueCross employee, you should avoid any situation where a conflict of interest ….. Company, to pay the expenses of an employee to attend a conference …. or certified accountant engaged in the performance of an audit of the ….. with federal and state laws. It is against the law to use corporate …

  8. ppo web » Blue Cross Corporate

    October 15, 2010 at 12:08 pm

    […] 11.The Progressive Pulse – New audit shows that state employees pay Seems like this had no benefit for any of the employees and was an absolute win-win for Blue Cross. p.s. God knows I don’t want to be overweight. … with federal and state laws. It is against the law to use corporate â?… http://pulse.ncpolicywatch.org/2010/02/16/new-audit-shows-that-state-employees-pay-for-blue-cross-ceo-travel-corporate-sponsorships-etc/ […]

  9. test king

    December 20, 2010 at 4:49 am

    I certainly enjoyed the way you explore your experience and knowledge of the subject! Keep up on it. Thanks for sharing the info

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