Dive Brief:

• The Blue Cross Blue Shield Association and 33 of its member companies are set to shell out $2.8 billion to settle allegations the Blues plans suppressed competition and underpaid providers for reimbursements between July 2008 and October this year.
• The settlement, announced Monday, stems from a 2012 lawsuit that alleged independent Blues businesses engaged in anticompetitive practices by agreeing not to sell insurance in each other’s service areas.
• Under the deal terms — which are subject to court approval — the Blues plans will begin to offer providers expanded options for coverage. Over 500 hospitals could be eligible to negotiate new contracts after the change, according to a memorandum about the deal. 

Dive Insight:

The proposed class action settlement is the largest antitrust payout to ever be awarded in healthcare, according to a Monday statement from law firm Whatley Kallas, which represented the plaintiffs.

At the center of the case is the Blue plans’ use of “exclusive service areas” and its reimbursement policies under the BlueCard program.

The BCBSA had a policy that prohibited Blues plans from selling policies to hospitals outside their service areas, according to the suit. Often, the result was hospitals only had one Blues plan available within their state, constraining plan options and allowing the insurer to drive up prices.

When providers cared for patients covered by another Blues plan, they were forced to submit claims through the BlueCard program, which providers used for administrative tasks related to claims, prior authorization requests and other things. Providers said the system was “non-transparent” and came with “additional costs, inefficiencies, and frustration,” according to the memorandum. 

The settlement lifts the BSBCA’s rule that allocated one Blues plan to each service area, opening the door for hospitals and providers to negotiate new contracts.

Of the proposed $2.8 billion settlement, providers and healthcare workers will pocket approximately $2 billion. Providers will take approximately 92% of the funds while workers will take 8%. The plaintiffs’ attorneys are set to receive up to $700 million, and an additional $100 million will be reserved to notify providers about the settlement and enforce the deal’s terms. 

Providers and healthcare workers who qualify for payouts under the settlement include those who had Blues plan patients between July 2008 and October 2024.

Blue Cross will also spend “hundreds of millions” to create system-wide improvements for providers and “transform” the BlueCard program, according to the settlement. The association is tasked with building an information platform that facilitates member benefits, including verifying eligibility for services and providing timely claims status updates.

Co-lead counsel Edith Kallas said the settlement will help resolve issues that have plagued providers for decades.

“We’re pleased that we have been able to achieve relief that will create a better system for healthcare providers and that will support the organizations and people we rely on to take care of us and our families every day,” Kallas said.

A spokesperson for the Blue Cross Blue Shield Association said the deal will “put years of litigation behind us.” BCBSA did not admit fault under the settlement.

This is the second time the parties have sought to settle the case. In 2020, the parties proposed a $2.7 billion settlement, however they received objections over terms from adjacent parties, including The Home Depot. The Supreme Court declined to hear those objections this June.

The current settlement is subject to approval from Alabama federal court U.S. District Judge David Proctor.