FOR IMMEDIATE RELEASE                                                   CIV
WEDNESDAY, JANUARY 18, 1995                                  (202) 616-2765
                                                         TDD (202) 514-1888

                                     
               BLUE CROSS BLUE SHIELD OF MICHIGAN PAYS U.S.
              $24 MILLION TO RESOLVE MEDICARE CLAIMS DISPUTE

    WASHINGTON, D.C. -- Blue Cross Blue Shield of Michigan today
paid the United States $24 million to settle a lawsuit charging
that it unlawfully billed the government's Medicare program for
thousands of medical insurance claims that should have been paid
from private insurance funds, the Department of Justice
announced.  
    Assistant Attorney General Frank W. Hunger, head of the Civil
Division, said the settlement resolves a suit (United States v.
Blue Cross Blue Shield of Michigan) the Department filed against
Blue Cross under the Medicare Secondary Payer (MSP) laws in U.S.
District Court in Detroit in 1989.
     "Congress passed the MSP laws to compel private insurance
companies to assume a greater share of the nation's health care
costs, particularly those of older workers and their spouses who
are covered by an employer-sponsored health plan," said Hunger. 
"This settlement demonstrates the government's commitment to
enforce these laws and protect the fiscal integrity of the
Medicare system."   
     MSP laws require private insurers such as Blue Cross to pay
primary benefits in certain circumstances where a person has
medical insurance under both Medicare and an employer health
plan. For example, when a person aged 65 or older continues to
work and receives health coverage through his or her employer.   
Blue Cross, a major private health care insurer based in Detroit,
had contracted with the Health Care Financing Administration, the
federal agency which administers the Medicare program, to manage
the Medicare program in Michigan.  HCFA has cancelled the
Medicare contract with Blue Cross and named Health Care Service
Corporation, an affiliate of Blue Cross Blue Shield of Illinois,
to manage the Michigan Medicare program.
     An audit by the Office of the Inspector General of the
Department of Health and Human Services found that Blue Cross
paid thousands of dual-coverage claims from the Medicare Trust
Fund rather than from its private insurance funds.
     Judge George E. Woods of U.S. District Court in Detroit had
ruled that Blue Cross must reimburse the government for Medicare
payments that Blue Cross should have paid although the size of
the reimbursement had not been determined.  
     "We are satisfied that the government received fair and
equitable compensation from Blue Cross today," Hunger said. "We
also want to point out that under today's agreement Blue Cross is
required to share data with the government.  This will result in
significant future savings since that will enable us to process
claims more efficiently."  
     As part of the settlement, Blue Cross will share data with
HCFA to prevent future Medicare overpayments and identify cases
of duplicate payments to health care providers.   
     The settlement resolves a longstanding dispute between HCFA
and Blue Cross over the extent of the company's liability for
such Medicare payments.  
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95-029