The Blue Cross Blue Shield Association and its 33 member companies will pay $2.8 billion and change the way they operate under a tentative settlement reached with a collection of providers.
The multipronged settlement would end a 12-year legal battle concerning allegations that the companies and the nonprofit association violated the Sherman Antitrust Act of 1890 by colluding to suppress competition and lower reimbursement. It also would change the companies’ BlueCard Program system for dealing with out-of-network patients.
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“This settlement ends a long-running legal challenge to the Blue Cross Blue Shield Association license agreements and related rules,” a spokesperson wrote in an email. “We deny the allegations made in the lawsuit. However, to reach a settlement and put years of litigation behind us, we have agreed to make some operational changes and a monetary payment to the provider class involved in the case.”
The settlement must be approved by Judge R. David Proctor of the U.S. District Court for the Northern District of Alabama-Southern Division.
Litigation over the Blues plans' conduct started in 2012 in a case filed by Jerry Conway, a chiropractor in Alabama, who challenged an alleged agreement among the member companies not to sell insurance in each other’s service areas. Nineteen other lawsuits filed by small providers, from hospitals such as Bullock County Hospital in Union Springs, Alabama, and systems like Ivy Creek Healthcare in Wetumpka, Alabama, were eventually consolidated into a single complaint.
The 33 independent Blues, the nonprofit association and the providers reached an agreement Oct. 4 after nine years of negotiations, according to the settlement memorandum filed Monday.
The proposed settlement is national and would apply to any provider who treated a Blue Cross member from July 2008 to Oct. 4 and agrees to be part of the agreement.
It reserves $100 million to notify providers about and enforce the settlement’s terms. Plaintiffs' attorneys would receive up to $700 million. Healthcare facilities would get 92% of the remaining $2 billion in funds, and healthcare workers will receive the remaining 8%.
The settlement also would lift an association rule that limits the hospitals Blues plans can contract with to those that were within – or contiguous to – their service area, which was often a single state. The settlement would allow hospitals to contract directly with Blues plans across state lines and treat out-of-state patients with the health insurance. That would expand the contracting ability of more than 500 hospitals, according to the memorandum.
The agreement also would require the 33 Blues and the association to create a single cloud-based platform for their BlueCard system, which providers can use to track claims, ask questions and submit prior authorization requests, among other things. The plans also must adhere to uniform, prompt payment when paying BlueCard claims, the memorandum said.
A committee would monitor compliance with the settlement terms for five years.
Blue Cross Blue Shield plans in 2020 agreed to settle an antitrust case brought by policyholders and employer customers for $2.67 billion. The 33 insurers and the association also settled a case from healthcare workers making related antitrust claims in July 2007 for $128 million.
