Adjustment reflects “risk corridor” payment from federal government
CHATTANOOGA, Tenn. — BlueCross BlueShield of Tennessee will send rebate checks to most individual/Marketplace policy holders who had coverage during 2018. This rebate was triggered by a delayed “risk corridor” payment the company received following a Supreme Court ruling last year that resolved the company’s lawsuit against the federal government.
This risk corridor payment retroactively changed the company’s medical loss ratio calculations for the 2018 benefit year, so BlueCross owes an additional rebate to members who had individual coverage in that year.
“We continue to center our efforts around supporting the health of those we serve by advocating for affordable, high quality medical care and using our members’ premiums responsibly,” said Kelly Paulk, vice president of product strategy and individual markets. “The majority of the premiums we collect are used to pay providers for medical and behavioral health care and prescription drugs, and for support services that enhance our members’ health care experience.”
BlueCross sets rates each year based on anticipated costs for members’ medical care and strives to keep operating expenses low. The Affordable Care Act (ACA) requires that health insurers providing coverage to individual and small group members spend at least 80 percent of collected premiums on health care programs and medical claims. This percentage, or medical loss ratio, is based on a three-year rolling average. If the company misses the spending target, it issues rebates to policyholders.
In 2019, BlueCross paid rebates to customers who had individual health plans in 2018 after spending a smaller-than-expected percentage of premiums on ACA-recognized health care needs. In 2020, BlueCross recovered $214 million from the federal government for losses taken by the company on individual health plans sold in prior years. As required by the Centers for Medicare and Medicaid Services, the company is going back and applying some of the recovered funds to its calculation of the medical loss ratio for 2018, and as a result, BlueCross is paying an additional rebate to affected members.
These additional rebates, which average $250 per member and may be as low as $5 for some policy holders, will be based on adjusted premiums for 2018 medical coverage – not the amount of premium each policyholder paid. (This means the company subtracts state, federal and other taxes from the total.) The rebate does not cover premiums for other coverage such as dental or vision.
Originally, BlueCross spent 77.9% of premiums on health care programs and medical claims for the 2018 reporting period, missing the 80% MLR target for individual policyholders by 2.1%. After incorporating the risk corridor funds, the updated 2018 MLR is 75.3%, which is 4.7% shy of the spending target.
“These rebates will affect approximately 100,000 BlueCross customers who purchased health insurance in 2018 in the individual market,” said Carter Lawrence, commissioner for the Tennessee Department of Commerce and Insurance. “This rebate system continues to work as intended.”
“The rebate checks will be delivered directly to the policyholder’s address. While these checks are valid and should be deposited, please be on the lookout for fraudsters who might want to use this as an opportunity to scam you or your loved ones,” Lawrence said. “If you have questions about your rebate check, please contact BlueCross directly. Tennesseans can also contact the Department of Commerce & Insurance with questions at 615-741-2218 or 1-800-342-4029.”
The rebate checks will be mailed to qualifying policyholders no later than May 25. For more information, visit bcbst.com/2018rebate.
BlueCross BlueShield of Tennessee is a taxpaying, not-for-profit health plan serving more than 3.4 million members in Tennessee and around the country. The Chattanooga-based company was founded in 1945 and has brought peace of mind to its members and local communities for more than 75 years. BlueCross BlueShield of Tennessee Inc. is an independent licensee of the BlueCross BlueShield Association. For more information, visit the company’s news center at bcbstnews.com.