Staff file photo by Doug Strickland / Scott Pierce of Blue Cross Blue Shield of Tennessee in Chattanooga, Tenn.

NASHVILLE — The head of a Connecticut-based health data firm is defending the company's work that found at least $17.58 million in medical overcharges paid to providers such as doctors through the insurance plan that covers Tennessee's state employees.

Stephen Carrabba, president of ClaimInformatics, which conducted a preliminary review of professional provider charges and payments made by the Tennessee State Employee Health Plan, is pushing back against criticisms made last month by Chattanooga-based BlueCross BlueShield Executive Vice President and Chief Operating Officer Scott Pierce.

The review was conducted under an initial contract with Tennessee Attorney General Herbert Slatery's office. But the contract, worth $400,000, is now being put back to bid in a process overseen by the state Department of General Services.

BlueCross and Cigna administer the state employees' insurance plan paying out hundreds of millions of dollars in claims annually. BlueCross has one plan it operates for the state, while Cigna runs two plans.

ClaimInformatics "stands behind our findings unequivocally," Carrabba said in one of several recent Times Free Press telephone interviews.

"We are hopeful we can finish what we started, and put these assertions to rest, in essence proving our findings to be accurate and bringing a level of transparency and accountability that the people of Tennessee deserve," added Carrabba, who hopes to win the new contract.

The company had said in its first-blush report to the state that its findings "relate to individual claims and are not a sampling with extrapolation." It said it examined 5.2 million professional claims from the beginning of 2017 through the end of 2019 with a value of $748 million. All were loaded into the company's ClaimIntelligence platform. The data was exclusive of any adjusted claims, the company said in its report to the state.


Read a copy of the initial contract ClaimInformatics contract


In his letter to the state, Pierce also wrote BlueCross' review of the work "revealed that substantially all of the alleged excessive payments in excess of billed charges were based upon a lack of understanding of our payment policies."

Because BlueCross pays certain provider types at a contracted flat rate per visit, Pierce said, the flat rate "applies regardless of whether the billed charges are above or below the rate. This program has resulted in significant overall savings" to the state health plan.

House Government Operations Committee Chairman Martin Daniel, R-Knoxville, a prime mover in the effort to do an examination, publicly disclosed in August that ClaimInformatics' initial report on professional providers, there was an eruption.

While some lawmakers who pushed for the review were under the impression back in August that ClaimInformatics was conducting the first look at claims free of charge in hopes of winning a later contract through the Tennessee Attorney General's office, that actually wasn't the case, the Times Free Press has since learned.

Slatery signed a contract with ClaimInformatics in May, according to a copy provided to the newspaper by his office. The company was selected from among five firms vying for the work under a professional services process. ClaimInformatics was to be paid $490,000 to do the work. But the agreement hinged on the funding being approved by the Tennessee General Assembly.

The attorney general's spokeswoman, Samantha Fisher, said in response to Times Free Press questions that because this was a professional services contract through the office, "the process was to talk with a number of interested parties and determine which appeared to be most capable of providing the most accurate and effective analysis.

"The contract provided that an initial data analytics review of plan data would be provided without charge and did not obligate any payments absent an appropriation by the General Assembly," Fisher said.

Senators, who knew nothing of the effort, felt blindsided this summer.

General Services oversaw the subsequent formal request for information process from interested vendors that ended earlier this week, a General Services spokesman told the Times Free Press. Officials are now looking at what type of process to use in awarding the contract.

Senate Finance Committee Chair Bo Watson, R-Hixson, said he knew nothing about the August provision directing a new process until asked about it by the Times Free Press. After making inquiries, Watson later said he believes it came from the House. Daniel and House Insurance Committee Chair Robin Smith, R-Hixson, believe it was put on in the Senate.


Carrabba hits BlueCross

After ClaimInformatics' report was released by Daniel to the Times Free Press in August, attorneys for BlueCross fired off a warning letter to Carrabba saying the nonprofit insurer was weighing suing the data firm over its report.

Then Pierce in his own letter to state Finance Commissioner Butch Eley and Executive Director of Benefits Administration Laurie Lee questioned ClaimInformatics' work on multiple fronts.

That included whether ClaimInformatics understood the company's payment structure. And Pierce also wrote that "as you know, [professional services firm] Aon performed the last such audit in 2018, with minimal findings and corrective actions recommended."

Carrabba said, "Aon has a business relationship with BlueCross as a client who promotes BlueCross plans. We believe it is a conflict of interest for BlueCross to suggest such an arrangement."

Asked about the assertion, Roy Vaughn, senior vice president and chief communications officer at BlueCross, stated in an email that "we're proud to be the choice for more than two-thirds of state employees as we continually strive to provide them with the best service and value. We look forward to a comprehensive audit of our work on their behalf, whenever it may occur."

In a letter to the Times Free Press, Carrabba objected to a description of the company as a "little-known firm," saying that "while the company is relatively young," having been formed three years ago, "our team of professionals has decades of experience reviewing claims."

"Our staff members are seasoned professionals with extensive backgrounds in fraud, waste and abuse analytics that support special investigative operations, including participation in the fraud unit of AIG, a global insurance company," he added.

In a subsequent interview, Carrabba said, "health insurance claim reviews is all we do every day."

He said company staff collectively have hundreds of years of experience with company co-founder Dawn Cornelis engaged in such work since 1992. ClaimInformatics has dozens of clients, he added.

In Tennessee, however, a number of officials were not familiar with ClaimInformatics. Among them was Daniel himself, who replied "no" when asked by the Times Free Press if he been familiar with the company before his unsuccessful 2019 efforts to obtain BlueCross and Cigna's pricing information from the state. Both insurers marched into federal court, arguing the information being sought by Daniel was proprietary. A judge issued a preliminary injunction.

Daniel said he was later flooded with calls, among them executives from several health care claim firms, including Carrabba, as well as several other similar companies.

Carrabba said what he "simply said to Chairman Daniel was ... hats off to you for doing the right thing and being sure that state assets were being administered appropriately" and that Daniel should ask for the "right data." In response to a request from Daniel, Carrabba said he provided him more information.

ClaimInformatics said in a report that its initial findings "were real results discovered by flagging payments made out of compliance with each carrier's own coding policies." It also questioned another $22 million in claims but said more work was needed before making any assertions. ClaimInformatics also noted that it didn't receive all the data fields it had sought from the state for the work.

Contact Andy Sher at or 615-255-0550. Follow him on Twitter @AndySher1.