In Brief: Minnesota Blues, Healthways Settle Contract Dispute

Blue Cross Blue Shield of Minnesota will receive $9.5 million from Tennessee-based medical advice and outsourcing firm Healthways.

The payment is to settle a dispute that arose when the Minnesota Blues contracted with Healthways to provide a medical advice service for its enrollees between 2001 and 2008. Blue Cross Blue Shield of Minnesota ended the service in 2008, saying it wanted to take it in-house.

In early 2010, the Minnesota Blues filed an arbitration claim against Healthways, saying it had violated provisions of its contract and was entitled to partial reimbursement of the money it paid the firm. The two parties were in the arbitration process until last year, when they agreed to settle the matter privately.

Under the terms of the settlement, Healthways will pay Blue Cross Blue Shield of Minnesota $4 million before the end of this month, and an additional $5.5 million by early 2015. The Minnesota Blues has the option of receiving services from Healthways in lieu of the second payment.

Healthways did not admit any wrongdoing as part of the settlement, which will take a significant chunk from its bottom line. The company said it will reduce its first quarter earnings by about 17 cents per share. Healthways reported a loss of $8.5 million on revenue of $663.3 million in calendar 2013.