Blue Health Insurers Drop Revenue Rule That Limited Competition
May 03 2021 - 3:48PM
Dow Jones News
By Anna Wilde Mathews
The Blue Cross Blue Shield Association said it dropped a rule
that limited competition among its member insurers, moving to
implement a key aspect of an antitrust settlement the companies
reached last year with customers.
The settlement hasn't won final approval from the federal judge
presiding over the litigation, so it isn't being fully implemented.
But last Tuesday the group of insurers formally lifted a cap on the
share of the members' revenue that could come from business not
under a Blue Cross Blue Shield brand, one of the moves it had
promised under the settlement.
Previously, the rule was that two-thirds of a Blue licensee's
national net revenue from health plans and related services must
stem from Blue-branded business.
The Blue Cross Blue Shield Association includes 35 insurers,
each of which typically hold exclusive rights to the Blue Cross and
Blue Shield brands within a certain territory, a setup that would
remain intact under the antitrust settlement.
However, lifting the revenue cap could allow the Blue insurers
to compete more against one another by expanding their non-Blue
businesses, experts said. Dropping the limit "certainly should
increase competition, " said Tim Greaney, a professor at the
University of California Hastings College of the Law, though he
said it isn't clear how quickly it would have an effect.
In a statement, the Blue Cross Blue Shield Association said its
move was consistent with the settlement. "Blue Cross and Blue
Shield companies will remain focused on the goal we have had for
over 90 years -- improving access to quality healthcare for all
Americans -- as the settlement continues through the Court approval
process and is implemented according to terms of the Agreement,"
the group said.
Anthem Inc. and Health Care Service Corp. are among the largest
Blue insurers. Together, all of the Blue companies cover more than
100 million Americans.
David Boies, a lead attorney for the Blue customer antitrust
plaintiffs, said elimination of the restriction "will substantially
increase competition in health insurance markets."
The antitrust claims were first brought in 2012 as a proposed
class action on behalf of employers and individual policyholders
with Blue coverage. The suit alleged that the insurers illegally
conspired to divvy up markets and avoid competing against one
another, driving up customers' prices.
The settlement has won preliminary approval from U.S. District
Judge R. David Proctor, in Birmingham, Ala., who wrote that the
deal's "structural relief is historic and substantial." The
settlement requires the insurers to pay about $2.7 billion, largely
to customers, and take steps that include dropping the national
revenue cap.
The revenue cap was one impediment to Anthem's $48 billion deal
to buy Cigna Corp., which ended up foundering largely over its own
antitrust issues. That deal could have added substantially to
Anthem's non-Blue revenue.
Still, the settlement wouldn't unwind the licensing structure
that allows the Blue insurers to hold exclusive rights to their
brands in certain geographies.
The Blue insurers are still facing a parallel antitrust suit
filed on behalf of healthcare providers, which alleges that the
insurers illegally pushed down the payments providers receive for
medical services. Both suits, consolidated in the Alabama federal
court, targeted the association and all the insurers to which it
licenses Blue brands.
One reason for the insurers to take action on the revenue rule
might be to improve their position in the healthcare providers'
ongoing suit, by removing one practice that could be viewed as
anticompetitive, Mr. Greaney said.
In response to a question about why the Blue association moved
now to get rid of the revenue rule, a spokeswoman said its board
made the decision "based on the terms of the settlement. It's one
step in a series that we will take to fulfill our commitments under
the settlement agreement."
Write to Anna Wilde Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
May 03, 2021 15:33 ET (19:33 GMT)
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