MONTGOMERY — The State Employees’ Insurance Board is seeking from Blue Cross Blue Shield of Alabama nearly $5 million that the board said it should have received in rebates but if Blue Cross complies with the request, the money won’t be returned directly to that board.
On Wednesday, the State Employees’ Insurance Board, or SEIB, which is a plan administrator for about 120,000 current and retired state and local government employees and their dependents, passed a resolution asking Blue Cross to pay about $4.97 million in drug rebates that should have been given to SEIB during an 18-month period that ended in December 2011.
The error is the first to be discovered under a state act approved by the Legislature and governor in 2011 that allows the Department of Examiners of Public Accounts to hire outside companies to perform “recovery audits.” The act also set up a special fund within the state treasury for money gathered from such audits, minus any federal money or previously earmarked funds that are recovered.
“Any amounts remaining in the fund shall be subject to expenditure for any lawful purpose through appropriation by the Legislature,” the act states.
The act was a result of a bill from state Sen. Del Marsh, R-Anniston. A spokesman for Marsh, Derek Trotter, said Wednesday that money collected under the act will be distributed like state general fund dollars, but could be directed back to the original agency.
But in the case of SEIB, William Ashmore, chief executive officer of the board, said that even without the withheld $5 million, SEIB didn’t actually lose any money.
“We still ended up taking in more rebate dollars, with (Blue Cross) keeping almost $5 million,” he said. “Had that audit not taken place, we wouldn’t have known about (the withheld rebates).”
Ashmore said state employees were not directly impacted by the error that occurred when Blue Cross subcontracted its pharmacy benefit manager duties for the SEIB to another manager, Prime Therapeutics. The audit is ongoing.
Blue Cross spokeswoman Koko Mackin sent a statement Wednesday regarding the year-long audit.
“We were hopeful that the board of examiners and their vendor would have been able to provide both the Alabama State Employees Insurance Board and Blue Cross with a final audit report so that we could work together to resolve any issues,” she said in the statement.
“We have always worked cooperatively with the board and its staff to resolve issues, and we anticipate a positive response to the board’s resolution.”
Though the SEIB audit was the first under the act, there are more to come.
“We have some others, but we can’t talk about them yet,” said Ron Jones, the state’s chief examiner.
Recovery Audit Specialists LLC of Washington, D.C., will be paid about 9 percent of the recovered funds, Jones said.
Jones told the board, including state Finance Director Marquita Davis, that his office doesn’t have the manpower or expertise to conduct the recovery audits. He later told The Decatur Daily and TimesDaily that in the past three years his office has lost about 100 examiners because of budget cuts, and has about 100 remaining. The office went from auditing $86 billion worth of state, county, local and university funds in 2007-08 to about $68 billion last year.