Major Blues Plans May Gain Opportunities From Tentative Antitrust Settlement

by Leslie Small

The Blue Cross and Blue Shield Association (BCBSA) has reportedly reached a tentative settlement in a lengthy legal battle over whether its member plans engage in anticompetitive business practices.

The lawsuit in question was filed in 2012 on behalf of employers and policyholders who took issue with Blues plans' agreement to divide the country among the association's 36 members and to restrict members' ability to offer non-Blues products. A related lawsuit filed by health care providers alleged that the Blues' anticompetitive practices improperly depressed their reimbursement.

On Sept. 24, the Wall Street Journal reported that BCBSA negotiated a tentative agreement in which it would pay $2.7 billion to the employer/policyholder plaintiffs. BCBSA also reportedly agreed to:

✦ Relax rules that currently require a national employer to work through the Blues insurer where its headquarters are located when seeking coverage from a Blues plan;

✦ Allow certain national employers to request a bid from a second Blues insurer of their choice when seeking coverage; and

✦ Abandon the rule that requires member plans to derive at least two-thirds of their national health insurance revenue from Blues brands.

Jay Godla, a partner at Strategy&, PwC's strategy consulting practice, tells AIS Health that the "bigger Blues are obviously very thrilled about the idea of lifting restrictions on the two-thirds rule, because that allows them to grow."

But there are bigger question marks surrounding how the settlement would affect the national accounts market, according to Godla, who says he could see three primary ways that would play out. Under one scenario, a smaller Blues plan would team up with a larger one in order to enter the national accounts market. Or there could be "account-level collaboration," in which a smaller Blues plan partners with a larger organization to pursue the business of select national employers. And "the third thing is free for all, where Anthem is competing with Blue Cross Blue Shield of Michigan for autos in Michigan," Godla says, referring to Detroit-based large employers such as General Motors or Chrysler Group. That last scenario, he says, is probably the least likely.

But Credit Suisse's A.J. Rice, in a research note to investors, wrote that Anthem "and other well-capitalized Blue plans may be able to compete more aggressively in the markets of other Blue plans if they choose to."

From Health Plan Weekly