State to investigate the Blues of Minnesota

06/25/2005

Star Tribune
June 25, 2005

The Minnesota Department of Commerce will investigate the practices of health care giant Blue Cross and Blue Shield of Minnesota and its relationship with a group of service cooperatives that provide pool health coverage for local governments and school districts.

The department will investigate whether some of Blue Cross’ consulting contracts and administrative fees may have led to higher health costs.

On Thursday, State Auditor Patricia Anderson criticized Blue Cross, calling its relationship with the cooperatives “cozy” and “entangled.” She also raised questions about a consultant used by the cooperatives—made up of school districts, municipalities and counties—who also is paid by Blue Cross, which is the health insurance carrier for seven of the cooperatives.

The Department of Commerce is responsible for regulating Blue Cross. In a statement, Commissioner Glenn Wilson said the department will look into how premium prices were established, how money from some reserve accounts was used by the cooperatives, and the nature of some “research and development” fees paid by Blue Cross back to the cooperatives.

A Blue Cross representative said he was unaware of the department’s investigation.