NewsNewsChannel 5 Investigates


Former lawmaker blasts Tennessee's effort to find millions of dollars erroneously paid out in health claims

Healthcare Horizons audit of state health care plan
Former state representative Martin Daniel
Money shot
$40 million dollars and state capitol
Posted at 5:32 PM, Sep 21, 2022
and last updated 2022-09-22 08:18:58-04

NASHVILLE, Tenn. (WTVF) — The state of Tennessee provides health insurance for more than 140,000 state employees and retirees.

But, NewsChannel 5 Investigates has found the state, and, in essence, taxpayers have been overcharged for some of this care.

That would mean potentially tens of millions of dollars in a three-year span.

So what has the state done to get back at least some of that money? It turns out, the state paid for an audit. But one former state lawmaker called that "a waste."

"It appears to be a waste of taxpayers' money," said Martin Daniel, a former state representative from the Knoxville area.
"We got a half-done audit. And it tells us very little," Daniel said.

But more than that, he's shocked that the state overpaid for state employee medical care, and no one seems to care.

"For example, we would see on one hand where a colonoscopy would cost in one place $800 and in another place $16,000. Of course, that’s at the taxpayers' expense," Daniel explained.

The state employee health insurance program is served by both Blue Cross Blue Shield and Cigna, and it provides care for some 146,000 current and retired state employees. It typically pays out more than $600 million a year in claims.

Daniel was so concerned about the overspending, that two years ago, while he was still in office, he called for a fiscal review of the health plan.

"I am talking about auditing the entire performance, the bills that have been received by the administrator, the amounts of been drafted from the state checking account," Daniel told the state's Fiscal Review Committee in January of 2020.

An outside company was brought in and reviewed some five million BlueCross BlueShield and Cigna claims filed between 2017 and 2019. And what they found was staggering.

"They determined that there was at least $17 million in erroneous payments made under the state healthcare plan. They also found that or suggested or had a suspicion that (another) $22 million in claims they felt like needed a closer look," Daniel told NewsChannel 5 Investigates.

That's potentially close to $40 million in taxpayer money — that, according to the cursory review, the state overpaid.

But instead of trying to find out what happened to all of that money and even trying to get at least some of it back, the state of Tennessee took that information and did nothing with it.

Instead, when state lawmakers approved money last year for a comprehensive, full audit of the healthcare plan, that audit did not go back to find those tens of millions of dollars from 2017 through 2019.

Former Tennessee Attorney General Herbert Slatery and his office hired another company to do the full audit and told them to look only at data from 2020.

And while that first review again found somewhere between $17 million and nearly $40 million in erroneous payments to the insurance companies, the audit of claims from 2020 found just $268,770 in overpayments to BlueCross BlueShield and $1,398,893 in overpayments to Cigna.

"That’s a big difference," NewsChannel 5 Investigates said to former Rep. Daniel.

"Yes," he agreed.

Stephen Carrabba's company, Claim Informatics, did the original review of claims from 2017 through 2019, and he too couldn't believe how little the full audit found.

"I was a little surprised with the lack of findings to say the very least," Carrabba told NewsChannel 5 Investigates.

"How much more (in overpayments) do you think they (the auditors) could or should have found?" NewsChannel 5 Investigates asked Carrabba.

"At least 20 times the amount that they found," Carrabba suggested.

Healthcare Horizons, the Knoxville-based company which did the audit of 2020 claims, refused to explain how there could be such a huge discrepancy.

But, the company told NewsChannel 5 Investigates in a statement:

"Healthcare Horizons was engaged by the Tennessee Attorney General’s Office after a national, competitive proposal process. Our engagement was performed as defined in the proposal process and was most thorough.

Healthcare Horizons has performed healthcare claims audits for over 20 years for some of the country’s largest employers and government entities. Our knowledge, experience and accomplishments equal or exceed that of any healthcare claims audit firm as evidenced by our selection by the Tennessee Attorney General’s Office.

In closing, Healthcare Horizons is headquartered in Tennessee and believes the taxpayers of our great state would be pleased to know that over five dollars of recoverable claims were identified for every one dollar spent in audit fees. That reflects our state’s history of excellent financial stewardship."

NewsChannel 5 Investigates also asked the AG's Office.

Before Attorney General Herb Slatery left the job at the end of August, his spokesperson said he'd be up for talking with us about the audit. But after he learned we wanted to talk about the critical things people were saying about it, suddenly, he had no comment.

But what about all of those millions of dollars the state overpaid in 2017 through 2019?

The AG's Office told NewsChannel 5 Investigates they chose to focus the full audit on the "most recent and comprehensive" data available.

But Martin Daniel asks why pay for a new audit that totally ignored the previous findings?

"I think that the people deserve answers with regard to money that’s being spent for audits like this," Daniel said.

The state paid $174,000 for the audit. The AG's Office insists that they would have had to pay $490,000 for a full audit of the 2017-2019 years to get enough information to go back and try to recoup at least some of that potentially $40 million.

Martin Daniel also wrote a highly critical report after seeing the results of the audit. He sent it to the Attorney General's Office but says they refused to answer any of his questions or address his concerns. He is now reaching out to current state lawmakers and hoping they'll take notice and even get the state Comptroller's Office involved.