Blue Cross Blue Shield (BCBS) – with 33 of its member companies – recently reached a proposed settlement, agreeing to pay $2.8 billion to settle allegations that BCBS plans violated antitrust laws by suppressing competition and underpaying providers for reimbursements from July 2008 to October 2024. This class action proposed settlement represents the largest antitrust payout to be awarded in healthcare.
The settlement is the result of a 2012 lawsuit that alleged independent BCBS businesses engaged in anticompetitive practices by agreeing not to sell insurance in each other’s service areas. As part of the settlement agreement – which is still subject to court approval – the plans will start to offer providers expanded options for coverage, with more than 500 hospitals potentially eligible to negotiate new contracts.
The case revolved around “exclusive service areas” and related reimbursement policies under the BlueCard program. BCBS had a policy that prohibited Blues plans from selling policies to hospitals outside of their service areas, which often resulted in hospitals having only one plan available within the state. This not only restrained plan options but also allowed for higher prices due to the lack of competition.
When providers submitted claims for patients covered by another Blues plan, they had to submit claims through the BlueCard program, which was “non-transparent” and had ‘additional costs, inefficiencies, and frustration.”
Of the $2.8 billion settlement, providers and healthcare workers will receive roughly $2 billion – split as 92% going to providers and the other 8% going to workers. Providers and workers who qualify for a portion of the $2 billion include those who saw Blues plan patients during the relevant time period. $700 million is set to go to the plaintiffs’ attorneys while the final $100 million goes to notify providers about the settlement and enforce the terms of the settlement.
Additionally, as part of the settlement there are sixteen categories of “transformational program requirements” that will hold BCBS plans accountable for timely communication and payment to providers; transparent decision-making and dealings with third parties; and timely claims status updates. The settlement also allows for greater contracting opportunities with the Blues for providers.
On top of the settlement, Blue Cross will also spend millions to implement system-wide improvements to the BlueCard program for providers. This includes building an information platform that facilitates member benefits, including verifying eligibility for services and providing timely claims status updates, as mentioned above.
Finally, all BCBS plans and the Blue Cross Blue Shield Association will be under an appointed Monitoring Committee for five years after the effective date of the settlement.
Interestingly, this is the second time the parties have attempted to settle the case – with the first attempt in 2020. At that time, they received objections over terms of the $2.7 billion agreement from adjacent parties.
According to Co-Lead Counsel firm Whatley Kallas, LLP, “Provider Plaintiffs have asked the court to preliminarily approve the settlement, which would resolve their claims that the Blues violated the antitrust laws by, among other things, agreeing to allocate markets through the use of exclusive service areas and to fix the prices paid to providers through the BlueCard Program.”
“Over the past 12 years we have dedicated an extraordinary amount of time, tireless effort and resources to this historic outcome for providers,” said Co-Lead Counsel Edith Kallas, of Whatley Kallas. “Many important issues for providers are finally being addressed. We’re pleased that we have been able to achieve relief that will create a better system for healthcare providers and that will support the organizations and people we rely on to take care of us and our families every day.”
Co-Lead Counsel Joe Whatley added: “The $2.8 billion cash payment, together with the hundreds of millions of dollars in additional investments the Blues are making to improve their systems, will benefit providers enormously. We believe that the actual value to providers is much greater than the total payments.”
Blue Cross Blue Shield did not admit fault as part of the settlement.