Regence overpaid doctors, suit says

A lawsuit says an Oregon plan overpaid claims to get higher rates from employer customers. The plan denies the charge; doctors say they didn't notice any extra money.

By Cheryl Jackson, amednews staff. Sept. 3, 2001.

An Oregon Blues plan has been overpaying physicians, according to a lawsuit filed by a fired employee.

In his July 17 filing in Multnomah County Circuit Court in Portland, Scott Koopman alleges that Regence BlueCross BlueShield of Oregon overpaid claims by more than $50 million from 1997 to 1999, then used that amount to set the premiums for employer groups.

Koopman had been an external audit and investigations officer for the Portland, Ore.-based plan during that time. He said he had been fired after discovering and reporting the overpayment to his supervisor.

Koopman's contentions are inaccurate, plan spokeswoman Cynthia Platonov said in a written statement.

"This is a sad attempt by a disgruntled former employee to hurt our company and its public image," she said. "We lose money when we pay more in claims; we don't make more money. We have no idea how Mr. Koopman came up with the $50 million figure."

Neither do physicians in the state, said Robert L. Dernedde, executive director of the Oregon Medical Assn.

"The issue of reimbursement for physicians has not been one of overpayment," he said "It has been one of delayed payment for the period that's referenced in this complaint."

Regence stood to gain by overpaying because of how it set rates for employers, said Charles Merten, Koopman's lawyer.

To set rates, the plan takes into account claims history for the employer group and adds an 11% administrative charge.

"By making these overpayments, BlueCross BlueShield artificially inflated the claims histories of its customers and, consequently, artificially inflated the insurance rates paid by its customers, including the administrative fee component paid to it," the lawsuit said.

Because the plan in 1997 turned off a system designed to flag potential problems, duplicate and ineligible claims were paid, Merten said.

"The reason for the decision was to increase its production, i.e., the volume of claims paid, in order to increase its own net revenues," according to the lawsuit.

The Blues did credit the employers with employees who were patients of overpaid doctors with the net amount of recovery efforts.

But the lawsuit says the company should refund the full amount to the customers. "That money should be recovered from the providers and paid back to the employers who were paying the premiums," Merten said. "They put the burden of that on the payers instead of itself."