Featured Health Business Daily Story, Dec. 13, 2016

Horizon, Blue Shield of Calif. to Issue MLR Rebate Checks

Reprinted from THE AIS REPORT ON BLUE CROSS AND BLUE SHIELD PLANS, a hard-hitting independent monthly newsletter on new products, market share, management strategies, profitability, strategic alliances and executive compensation of BC/BS plans. (Not affiliated with the Blue Cross and Blue Shield Association or its member companies.) Sign up for a $72 two-month trial subscription today.

By ,
December 2016Volume 15Issue 12

Two large Blues plans are refunding millions of dollars to customers because they didn’t spend enough on claims under the medical loss ratio (MLR) provision of the Affordable Care Act (ACA).

Horizon Blue Cross Blue Shield of New Jersey on Nov. 17 said it will pay out more than $70 million in MLR rebates for the 2015 plan year. About 155,000 members who purchased an individual policy will receive an average rebate of $423, the company said, and 31,000 small-group members will receive an average $77 rebate. Another 700 rebate checks, totaling almost $2.9 million, will be mailed to Horizon Healthcare of New Jersey HMO members. The average check will be $4,103. Those members will get their rebate checks before year-end. Horizon said it will rebate a total of $70.9 million. Last year, individual policy enrollees received an average rebate of $90, and small-group members didn’t get a rebate.

For individual and small-group coverage, the MLR rule requires carriers to spend at least 80% of premium dollars on medical care and quality improvement. The remainder can be dedicated to administration, marketing and profits. The MLR threshold for large-group plans is 85%.

The AIS Report on Blue Cross and Blue Shield Plans

Blue Shield of California on Nov. 1 said it will have to pay nearly $25 million in MLR rebates to some 240,000 state residents with employer-based coverage. The money will be sent to the employers, who will then dole out the rebates to employees based on 2015 premium payments. The average refund per member in the affected Blue Shield policies was $58. Blue Shield said it had an MLR of 77% in 2015 for these specific policies, below the minimum 80% MLR required by the ACA.

This marks the second year in a row Blue Shield has had to make such payments for failing to spend enough of each premium dollar on medical costs and quality efforts versus administrative expenses. For the 2014 plan year, the insurer remitted $85 million to individual and small-group enrollees.

See Horizon’s press release at http://tinyurl.com/hjs8tt5. For more information about Blue Shield of California’s rebate, visit http://tinyurl.com/zrkxv5m.

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