Thursday, April 30, 1998 | 10:32 a.m.
CARSON CITY -- The financial picture of the 25,000-member state group health insurance system continues to be muddled.
"This is a cause for concern for me," said Fred Suwe, a member of the state Committee on Benefits that manages the fund which collects about $93 million a year in premiums.
Mike Gray, a financial consultant to the insurance system that covers state and university employees and their dependents, told the committee Wednesday there's been an upward trend of 12.5 percent in claims, but the system was budgeted only for a 7 percent increase in fiscal 1997.
Gray said the status of the fund is confusing because thousands of claims from last year still haven't been paid.
"Until the data stabilizes, there will be an incomplete picture," Gray said.
Gray, with the Mercer consulting firm, said it will be May or June before any definitive figures are available.
The benefits committee already has asked permission from the Legislative Interim Finance Committee to transfer $10.6 million from one reserve fund and $9.6 million from another reserve account to help meet expenses.
The committee said it received $59.8 million to pay claims for the fiscal year and as of March 31, it has shelled out $55.5 million. The legislative committee will consider the request at its May 6 meeting.
Suwe said this was money already available to the insurance system and is not a bailout by the state, but merely a transfer of funds.
The insurance system's problems began when the benefits committee hired L & H Associates to process the claims of employees for medical services. It fell behind and was then fired, leaving more than 85,000 unpaid claims. UICI of Texas was hired on an emergency basis to clear up the backlog. Doctors, hospitals and other medical providers were not paid for up to a year.
UICI administrator Jan Marie Reed told the committee there are 16,000 claims dating back to 1997 that remain unpaid, but they should be taken care of within a week.
Reed said a major problem facing the system is the loss of its discount rates, negotiated with hospitals or doctors if the bills were paid within 30 days. Since the bills were not processed within that time period, the state ended up paying full price for many services.
On a positive note, Suwe said the system advanced $1.5 million to medical providers, part of which will offset some of the pending claims.
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