State Settles With Blue Cross Over Excessive Pay

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(Host) Blue Cross and Blue Shield of Vermont has agreed to refund $3 million to its subscribers.

The state says the company paid excessive retirement compensation to a former CEO in 2008.

VPR’s Bob Kinzel reports.

(Kinzel) When Blue Cross revealed that it had paid former CEO William Milnes $7 million in retirement benefits two years ago, there was a wave of protest from state regulators, lawmakers and a number of consumer groups.

The state Department of Banking and Insurance launched an investigation and the new settlement is the result of that probe.

Commissioner Paulette Thabault says Blue Cross enjoys a unique position in the state’s health care system because it’s a non profit organization with a public mission defined by law.

As a result, she says it’s appropriate for state regulators to review compensation packages for Blue Cross executives and she says this one was way over the line:

(Thabault) "The overall compensation led to a particularly high – and what we found unreasonable – retirement compensation pay out, so it was not reasonable and that prompted BISHCA to take action."

(Kinzel) Thabault says the agreement also calls on Blue Cross to reduce its medical claims trends. That’s a development that she says could help make premiums more affordable in the future:

(Taubault) "That is what is the primary driver of the unsustainable premium increases, that we see. So, coupled with the $3 million refund and the obligation to take steps to reduce the medical claims trend, our hope is that in the future this really would have an impact on increases."

(Kinzel) Blue Cross Vice President Kevin Goddard said his company accepts the findings that the payments were excessive and Goddard says refunding the money to subscribers is a good idea:

(Goddard) "They felt that – looking at the statute and looking at the compensation package – that it was excessive payment. From our point of view, as the order suggests, we accepted the findings and proposed the way to return the money to our subscribers so that we can move on."

(Kinzel) Goddard says Blue Cross has also re-evaluated and revised compensation packages for all of the company’s executive officers.

For VPR News I’m Bob Kinzel in Montpelier.

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