BCBS Antitrust Settlement

In October 2020, the Blue Cross Blue Shield Association (BCBSA) and the BCBS companies reached a $2.67 billion settlement to end 9 years of litigation.  The class action antitrust lawsuit originally filed in 2012 alleges that licensing rules within the BCBS system limit competition amongst BCBS plans which can cause higher costs to policyholders.  The defendants deny any wrongdoing but have agreed to modify some business practices.  The Court will hold a Fairness Hearing to decide whether to approve the settlement on October 20, 2021.  After attorney fees and other costs, the net settlement funds will total about $1.9 billion.

The settlement administrator has begun reaching out to employers, employees, and individuals who had BCBS medical coverage during the covered timeframes to give them a unique ID to use on this web portal for opting in or out of the settlement.

• To receive settlement funds, class members must actively opt in by November 5, 2021.
• Anyone not opting in will be bound by the settlement terms but will not receive payment.
• Anyone wanting to preserve their right to not be bound by the settlement terms must actively opt out by July 28, 2021.
• Someone can also choose not to exclude themselves but still submit a written objection to the settlement by July 28, 2021, if they wish to have their objections considered.

Ultimately, this is a decision each employer and individual should make with the advice of their own legal counsel.  IMA is not an attorney firm and cannot advise on what course of action to take.

Class members and allocations are outlined below.  Federal, state, and local governments are not eligible, but other entities in the public sector such as schools are eligible.  Stand-alone dental and vision plans are not part of the settlement.

• 93.5% of the Net Settlement Fund (or around $1.78 billion) is allocated to the following class members that actively opt in by November 5, 2021:
  • Employers with an insured BCBS plan between February 7, 2008, and October 16, 2020
  • Employees enrolled in those insured group health plans are being notified separately of their ability to opt in or out
  • Individuals enrolled in an insured BCBS plan in the individual market between February 7, 2008, and October 16, 2020
• 6.5% (around $120 million) allocated to the following class members that actively opt in by November 5, 2021:
  • Employers with a self-funded BCBS plan between September 1, 2015, and October 16, 2020
  • Employees enrolled in those self-funded group health plans are being notified separately of their ability to opt in or out

There are default calculations to allocate funds among the class members opting in.  Employers and employees are only allowed to bypass the default option (and choose an alternative option) if they can substantiate they paid more than the default assumptions below.  If an employer submits proof of paying a greater percentage which is accepted by the settlement administrator, then any employees opting in will be subject to the lower resulting percentage.  Given how class action lawsuits typically work, it is probable that payouts will be extremely small, so employers will want to weigh whether it’s worth putting in extra effort to gather and submit substantiation they paid more than the defaults below.  For any payment totaling $5 or less, the claimant will be notified they do not meet the minimum to receive a payment.

• When opting to participate and the plan was insured, the default option assumes:
  • Employer paid 85% and employees paid 15% of single premiums, and
  • Employer paid 66% and employees paid 34% of family premiums
• When opting to participate and the plan was self-funded, the default option assumes:
  • Employer paid 82% and employees paid 18% of administrative fees (i.e., fixed costs) for single coverage, and
  • Employer paid 75% and employees paid 25% of administrative fees for family coverage.

The settlement administrator is reaching out to employees, so the employer does not have to provide communication around this.  However, it might be worthwhile to provide something that proactively explains it instead of having a lot of employees coming to you asking about it.  Let your IMA Benefits team know if you’d like to have a copy of a sample employee communication we’ve developed.  It will be important to not be perceived as providing advice on what the employee should do.

Second Blue Bid

Also, no earlier than April 1, 2022, large self-funded employers with more than 5,000 employees will be eligible for an opportunity to request a “second Blue bid” from one other BCBS company outside of their local BCBS.

 

IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.

This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.