02/06/2025
BCBS Arkansas Accused of Mismanaging Millions in State Funds
An audit instituted by the state government discovered a series of overcharges by the payer and an attempt to expand the investigation suddenly went quiet.
By Mansur Shaheen|January 31, 2025
Photo Credit: Getty Images
Arkansas Blue Cross and Blue Shield failed to catch millions of dollars' worth of overcharges while managing the state health plan, an audit found.
In one bill sample, more than 60% of the expenses taxpayers paid to cover state employee medical expenses could have been avoided.
The audit was performed by US Beacon, a Little Rock, Ark.-based firm that was brought in by the state to audit claims in 2020. Then, the state issued a request for proposal for an audit of all of its large medical bills – with claims of $10,000 or more – but the process, which US Beacon bid on, was abruptly ended without an award.
A BCBS Arkansas spokesperson, in an email, didn't address the overcharges found in the audit.
Documents from the audits, obtained by Health Payer Specialist, found that US Beacon uncovered $2.7 million in taxpayer overpayments across nine medical claims as part of an audit performed in 2024. The potential savings represent 63% of the $4.2 million the state paid for these claims. For one bill, BCBS of Arkansas paid $1.9 million, while the audit found that the payer should have instead paid just $756,318 – a difference of $1.2 million.
Kimberly Carleson, CEO of US Beacon, told Health Payer Specialist that in many cases, providers double-bill for elements of a treatment or procedure. For example, they may charge for a surgery, then charge once more for individual elements of the surgery.
US Beacon, which performs audits for employers and payers, gets paid by keeping a portion of realized savings. Carleson said that nearly all bills they look at have ineligible charges. On average, medical bills are inflated by 30%, she says.
The firm was brought in to perform an audit to help tackle spending in 2019 by Joseph Wood, who led the Arkansas Department of Transformation and Shared Services at the time.
US Beacon performed the first audit in 2020, reviewing nine claims where the state had paid a total of $1.2 million to settle. The audit found that $300,000 of the charges were in excess of what BCBS should have agreed to pay, finding potential savings of around 30%.
Moves to widen the audit fall silent
Wood then advocated internally for US Beacon to take a full-time role auditing all state employee medical bills over $10,000. The Covid-19 pandemic put that plan on ice, and then, in 2023, Wood left his role to become chair of the state Republican party. Further disruption of the process came when the state government became embroiled in a controversy over the $19,000 purchase of a lectern by the Republican Gov. Sarah Huckabee Sanders.
Carleson said that state officials decided to put out a request for proposals for medical audits, rather than hiring US Beacon outright, because state spending was under intense scrutiny by the media and lawmakers following the lectern controversy.
The 2024 audit performed by US Beacon was a part of the RFP process, as they were handed nine claims the state had already paid in years past.
Documents reviewed by Health Payer Specialist show that US Beacon helped write the RFP, the final version of which was issued on March 25. Contractors had a deadline of March 28 to respond to the request, and US Beacon was the only firm to submit a proposal.
On April 3, US Beacon officials met with three Arkansas Department of Transformation officials: Grant Wallace, who leads the agency now, Julie Robnolt and Kimberly Duvall. On the afternoon of April 4, the RFP was abruptly closed without an award.
Health Payer Specialist reached out to Wallace and Robnolt but neither provided comment by deadline.
A Department of Transformation spokesperson said in an email said the RFP was pulled to give the state more time to study the services US Beacon offered to provide. US Beacon said that it never received a reason why the RFP was closed with no award.
In internal Department of Transformation emails viewed by Health Payer Specialist, one state employee complained, "[US Beacon] were not really willing to work with us if we needed them to review paid claims ... They were not clear on pricing in the interview either."
In another internal email Wallace said that more information was necessary before moving forward with a medical claim review in a fiscally responsible manner.
We conduct compliance review of medical claims for corporate and gov. health care & workers comp.
