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.