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

NASHVILLE — A top Chattanooga-based BlueCross BlueShield of Tennessee official is questioning a private data firm's assertions the nonprofit insurer paid out $11 million in medical overcharges during a three-year period in its role as a third-party administrator of state employees' health plan.

In his Sept. 3 letter to Tennessee Finance Commissioner Butch Eley and Benefits Administration Executive Director Laurie Lee, BlueCross Executive Vice President and Chief Operating Officer Scott Pierce said the company conducted its own "high-level" analysis of claims in the date range that Connecticut-based ClaimInformatics, which conducted the initial review, said it used.

It "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," Pierce wrote.

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.

ClaimInformatics said in a preliminary June report that the state health insurance plan's third-party administrators, BlueCross BlueShield and Cigna, overpaid at least $17.58 million over a three-year period in bill claims by professional providers such as physicians. Those overpayments are "ready for repayment," the firm asserted.

The alleged overpayments were out of a total of $748.32 million in paid professionals' claims the firm said it examined. The little-known firm 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.

Tennessee Attorney General Herbert Slatery is now working with state Comptroller Justin Wilson on issuing a contract for a full-fledged, formal audit of the State Employee Health Plan. ClaimInformatics, which is angling for state business but has no guarantee of winning the contract, did the initial look under a no-fee contract with Slatery's office.


Read the letter from BlueCross


BlueCross' Pierce also said in his letter that BlueCross wants a "formal and comprehensive audit." He added that Aon, a well-known international firm providing services including performance reviews of claims and clinical audits, examined the state plan's third-party administrators' work in 2018 and came away "with minimal findings and corrective actions recommended."

The CEO also said BlueCross is "eager" to work with both state officials and a "recognized, credible benefits consultant to examine our claims payments and processes in a well-constructed audit."

Pierce asked state officials to provide BlueCross the claim-level data disclosed to ClaimInformatics in its initial review "so that we may validate and understand what claims were used in this review" and "determine if alleged overpayments are valid and subject to recoupment."

In her response to BlueCross last week, state Benefits Administration Executive Director Lee said state officials agree the ClaimInformatics report "was preliminary in nature, based on partial information and is not complete or validated. A full analysis would require information from and engagement with BlueCross and our other carriers."

Lee also told Pierce the administration also understands Attorney General Slatery plans to include BlueCross in discussions during the procurement process.

Finance Commissioner Eley told a legislative panel last month that while ClaimInformatics' initial findings were "helpful," a planned "deep dive" is necessary before drawing any firm conclusions.

In December, a federal judge blocked the state from releasing BlueCross and Cigna's claims data and pricing information to Rep. Martin Daniel, a Knoxville Republican, after the companies filed suit arguing it infringed on their trade secrets.

Later, Attorney General Slatery obtained the information from Benefits Administration officials under state government's authority and ClaimInformatics did the work. After Daniel released the report, BlueCross complained to ClaimInformatics in a letter that also threatened legal action.

In an Aug. 26 memo to members of the administration's various insurance committees, Lee said Slatery entered into the third-party review with ClaimInformatics "under certain terms and conditions" and "the review was to be kept confidential and could not be disclosed for any purposes."

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