BCBSA Settles Anti-Trust Litigation for $2.7B, Anthem Pays 22%

November 05, 2020 - Blue Cross Blue Shield Association (BCBSA) has nearly concluded an eight-year-long anti-trust litigation with a $2.67 billion settlement, according to court documents which the Office of the Insurance Commissioner of Washington State has made available to the public.

The case could not be completely settled until the 36 Blue Cross Blue Shield companies approved the settlement.

“The BCBSA and Blue plans have approved a settlement agreement and release, or the Subscriber Settlement Agreement, with the subscriber plaintiff,” Anthem’s third quarter report from October 28 stated.

BCBSA has not acknowledged anti-trust and anti-competitive actions on their part.

“We reject claims plaintiffs made in the lawsuit,” read a BCBSA statement on the matter.

“However, to reach a settlement, we’ve agreed to make some operational changes and provide payment to members of the class involved in the case. Settling now is the right action at the right time because it allows us to remain focused on the goal we’ve had for more than 90 years: improving access to quality healthcare for all Americans and the health of our local communities.”

Qualifying policyholders will receive at least $5 from the $2.67 billion settlement. In total, Blue Cross Blue Shield Association has 107 million members in the US—one in three Americans are covered by a Blue Cross Blue Shield health plan.

According to Anthem’s third quarter report, the company will cover $594 million of the settlement cost, which is roughly 22 percent of the overall cost.

In addition to paying billions of dollars in monetary relief, BCBSA has agreed to eliminate its national revenue caps and put limits on its local revenue caps.

“That cap, which the Blues call the ‘National Best Efforts’ provision, requires that two-thirds of each Member Plan’s national healthcare-related revenue come from Blue-branded products as opposed to non-Blue (i.e. ‘Green’) business,” the court document explained.

The settlement will also impact the bidding process for Qualified National Accounts for Blue plans. National accounts are employers that offer the same coverage benefits across multiple sites. These large employers used to be restricted to only one Blues health plan bid, but now will be able to bid for two Blues health plans.

Additionally, there will be fewer limitations on BCBSA’s acquisitions, the company will offer direct contracting between non-provider vendors and self-funded accounts.

The most favored nations clauses and differentials—which the Department of Justice and the Federal Trade Commission have recognized as having varying impacts on competition—will be restricted.

Lastly, BCBSA will submit to a five-year monitoring period, starting when the court issues the final judgement and dismissal.

This is not the company’s first time embroiled in an anti-trust lawsuit.

Anthem’s attempt at merging with Cigna resulted in a lawsuit from the Department of Justice which ultimately found that the merger would violate anti-trust laws.

The repercussions of that merger have only recently come to a close five years after the original merger announcement. After much dispute between the payer giants about who should pay damages to whom for the blocked merger, the court decided that neither company would receive financial compensation for their troubles.

“This outcome leaves the parties where they stand. Neither side can recover from the other. Each must deal independently with the consequences of their costly and ill-fated attempt to merge,” the ruling concluded.

While these proceedings come to a close, the House of Representatives passed a bill that would repeal a law protecting payers from certain anti-trust regulations. Payers stood firmly in defense of the law—known as the McCarran-Ferguson Act of 1945—on the grounds of maintaining state regulatory power over the payer industry.

The timing of these rising tensions coincides with an American Medical Association report on payer consolidation. The report found heightened payer consolidation activity in the past five years, resulting in a 56 percent increase in the industry’s consolidation.