Blue Cross Direct Pay gets 2/3 of requested rate hike

PROVIDENCE – The R.I. Office of the Health Insurance Commissioner has approved an average rate increase of 8.7 percent, or nearly a third less than the 12.7 percent the company had requested, on Blue Cross & Blue Shield of Rhode Island direct-pay insurance products.
Blue Cross Direct Pay products provide coverage for about 14,000 members who are not eligible under employer-based or state or federal health insurance programs. Some subscribers will see increases above the average and others below it when the increase takes effect on April 1, the OHIC noted.
The insurer does not plan to appeal the ruling, Kim Keough, assistant vice president of public relations for BCBSRI, told Providence Business News in an e-mail interview today.
“While we are disappointed we did not receive the full amount of our request, we are pleased that the hearing officers generally validated our need to adjust rates to reflect increased claims costs,” Keough said.
In a statement Friday night, Health Insurance Commissioner Christopher F. Koller acknowledged BCBSRI’s efforts.
But he also emphasized that his office expects a proactive approach to holding down costs for the direct-pay population, which does not benefit from any employer contribution to health coverage. “Merely detecting, valuing and passing on these increases to customers is not consistent with Blue Cross’ affordability options,” Koller said.
To achieve a lower rate increase, his office called for the following changes in the plan filed by BCBSRI on Nov. 15:
• The elimination of the insurer’s proposed contribution to reserves of 1.25 percent of total premiums. BCBSRI’s reserves already are more than adequate, the OHIC said, adding that a contribution by the particularly vulnerable Direct Pay members would be “not in the consumer interest and inconsistent with Blue Cross’ mission as a publicly chartered, nonprofit charitable institution.”
• The elimination of a proposed 0.4-percent premium increase to offset the costs of a Wellness Health Benefit Plan. “Until Blue Cross can demonstrate that the WHBP benefits all Direct Pay members, it cannot pass these costs on to all subscribers,” the office said.
• A reduction of the insurer’s total Direct Pay budget by about $250,000 or 0.4 percent of the average premium. “Blue Cross overstated its budget by approximately $250,000 … which was eliminated,” the OHIC said.
• A reduction from 0.5 percent to 0.35 percent of Direct Pay premiums in the amount set aside to recoup the costs of BCBSRI’s new information technology system.
• A reduction of 1.0 percent “on affordability principals,” which the OHIC said was based on two issues raised at last month’s public hearings: the lack of appropriate oversight, prioritization or targets for the insurer’s affordability initiatives; and an unchecked increase in the rate of use of inpatient services.
Public comments about the insurer’s Nov. 15 rate filing were overwhelmingly negative, the OHIC said. The office received about 50 written comments, via letters and e-mails, and nine comments via testimony at the public hearings on Jan. 14 and 17. Additional hearings were held Jan. 28 and 29.
Many of the comments expressed concern that BCBSRI should not be allowed to recover any part of its $20 million settlement – reached in December, in the influence-peddling scandal known as Operation Dollar Bill READ MORE) – with the U.S. Attorney’s Office, the OHIC said. But, the office emphasized, no portion of the rate filing or the approved rate increase was ever intended to recoup that expense.
“Blue Cross can be justly proud of certain leadership efforts in the health care community as presented in this hearing, particularly on behalf of primary care and health information technology, and its AccessBlue Program,” Koller said. But, he added, “more work must be done to translate these general intentions into effective management practices that deliver more-affordable health care for Blue Cross Direct Pay subscribers, all Blue Cross customers and the State of Rhode Island.”
Additional information, including Christopher F. Koller’s full Direct Pay Order and Decision regarding the BCBSRI rate increase request and the insurer’s initial direct pay filings, is available from the R.I. Office of the Health Commissioner at www.ohic.ri.gov.
Blue Cross & Blue Shield of Rhode Island, founded in 1939 as the Hospital Service Corporation of Rhode Island, is a nonprofit health insurance company insuring more than 670,000 individuals statewide. BCBSRI is an independent licensee of the Blue Cross and Blue Shield Association. Additional information is available at www.bcbsri.com.