Blue Cross $20M fund is a long way from fruition

More than a month after Blue Cross & Blue Shield of Rhode Island agreed, among other things, to pay a $20 million penalty to settle its part of a federal public corruption prosecution, the money has yet to be disbursed and the fund the insurer is supposed to create has yet to be set up.
Blue Cross entered an agreement with the U.S. Department of Justice in mid-December in which the company admitted it had made business deals resulting in payments of more than $650,000 to top legislators while it was lobbying those same legislators on key issues. (READ MORE.)
The insurer agreed to cooperate with the ongoing probe, dubbed “Operation Dollar Bill,” to institute several ethics reforms, and to pay $20 million – without raising premiums to recover the money – that would be used to create a fund at The Rhode Island Foundation.
Earnings and interest from the fund, the U.S. Attorney’s Office has said, “will be used to support projects designed to provide quality affordable health care services in Rhode Island.”
But the details – what types of projects might qualify for grants, how big the grants might be, who will evaluate applications, etc. – have yet to be decided.
Melanie Coon, vice president for communications and marketing at The Rhode Island Foundation, said officials there had not sought the $20 million or been part of the conversation with the U.S. attorney’s office until shortly before the deal was announced.
The government did ask the foundation whether it would be willing to administer such a fund, she said, and the board voted to approve the plan.
The money will create a “field of interest fund” focused on health care, Coon said. But that is a fairly general designation; one of the questions the foundation will have to address before it starts making grants will be whether to narrow the focus or leave it broad.
Asked whether R.I. Health Insurance Commissioner Christopher F. Koller or leaders of community groups might be asked for input, Coon said the foundation hadn’t put together a process for that yet. “But we do have some internal expertise on health care issues,” she said, “and we would seek outside counsel if necessary.”
The entire process of setting up the fund and defining its use, Coon said, will likely take six to nine months once the money arrives, and grants would likely not be made until the fourth quarter. The $20 million will be invested with the rest of the roughly $600 million already held by the foundation (in about 1,000 funds), and spending rules will be set up to ensure the fund can keep growing, Coon said; most funds’ annual payout is about 4 or 5 percent of their value.
One entity that won’t have a say in how the $20 million is used is Blue Cross, Coon said.
Asked how the insurer views the situation, BCBSRI spokeswoman Kim Keough provided a written statement noting that “by placing the money in a trust fund, it will produce perpetual income to be used in a focused, strategic way to improve quality of care and help address affordability. This way, the money will benefit our entire community for years to come.” •