Medicaid:

Millions of Dollars Not Recovered From Michigan Blue Cross/Blue Shield

HRD-91-12: Published: Nov 30, 1990. Publicly Released: Mar 22, 1991.

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Pursuant to a congressional request, GAO examined Michigan's efforts to ensure that its largest private health insurer paid claims for Medicaid recipients it insured.

GAO found that: (1) Michigan has experienced difficulty recovering from its largest private insurer since 1972, although other health insurers routinely processed postpayment claims; (2) the insurer maintained that its computer system could not process the claims as submitted and that it needed additional information, preferably submitted on its own claim form; (3) administrative difficulties in meeting the insurer's specifications for payment precluded Michigan from obtaining significant recoveries; (4) since 1988, Michigan has not recovered any of the medical claims it paid for Medicaid recipients covered by its largest insurer; (5) Michigan did not take full advantage of its opportunity to avoid paying claims unnecessarily; (6) Michigan and the private insurer did not implement an agreement they made concerning the development of a claim processing system; (7) federal and state monitoring of Michigan's Medicaid recovery program was ineffective; (8) Michigan did not take all of the actions it could to ensure that insurers complied with Medicaid requirements; and (9) with recoveries from the private insurer indefinitely postponed, Michigan accumulated a $59 million backlog of claims.

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