ST. PAUL -- HealthPartners Inc. spent thousands of dollars on international travel, stays at four-star resorts and dinners at top restaurants before adopting new travel and entertainment policies last July, Attorney General Mike Hatch said Wednesday.
The health maintenance organization also gave its executives bonuses based on its performance while it significantly increased its commercial premiums, Hatch said in his office's investigation into whether the HMO was complying with Minnesota's nonprofit organization laws.
Although the review does not allege any criminal violations, Hatch said in an interview that he is troubled by the ethics of the extravagant spending.
"It says that there's a lack of accountability in the health system," he said. "The policy of this state is that health care is extraordinarily important, that the focus ought to be the patients. ... The irony is that an HMO is supposed to be managing costs."
The HealthPartners review follows Hatch's earlier examination of Allina Health System and Medica. That investigation uncovered spending on consultants, executive perks, travel and gifts that Hatch contended were inconsistent with the mission of nonprofits. Next up, he said, will be an investigation of Blue Cross and Blue Shield of Minnesota, another of the state's largest health insurers.
HealthPartners consistently underreports compensation paid to its officers and uses a flawed process for determining and monitoring executive compensation with insufficient oversight by the board of directors, the review said.
In addition, Hatch questioned HealthPartners' use of consultants, saying the HMO spent about $26 million on consulting fees and expenses from 1997 through 2000, but appeared to consistently ignore its own policies and internal audit recommendations regarding third-party contracts.
The state found millions of dollars in consulting fees for which HealthPartners never sought bids.
Hatch recommended that HealthPartners not pay consulting fees and expenses unless the invoices sufficiently support the amount billed and try to reduce expenses on non-medical services such as lobbying, public relations, polling and crisis management.
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