Judge Finalizes Blue Cross Blue Shield Antitrust Settlement

Blue Cross Blue Shield (BCBS) has settled its antitrust litigation related to its practice of allegedly reducing competition between BCBS plans.

“Blue Cross Blue Shield Association and Blue Cross and Blue Shield companies are pleased with the Court’s Order approving the settlement we reached to resolve the claims in this case. As the settlement approval process continues to progress, Blue Cross Blue Shield Association remains committed to finalizing the agreement and implementing its terms,” BCBS shared in an emailed statement.

The settlement—In RE: Blue Cross Blue Shield Antitrust Litigation MDL 2406—allots $2.67 billion to be placed in a fund for authorized claimants. These funds must be paid out within 30 days of the effective date of the settlement. The case was decided in the district court for the northern district of Alabama, southern division.

Attorney’s fees will absorb $626.5 million of the funds and another $40.9 million will go toward litigation costs and expenses.

The plaintiffs were both individuals and companies that were members of a BCBS company, the BCBS settlement website explained. The plaintiffs argued that BCBS companies agreed not to compete with each other in the same geographic regions. 

BCBS companies argued that their practices were not an antitrust violation and that their way of doing business resulted in cost savings for consumers.

“The Court has not decided who is right or wrong. Instead, Plaintiffs and Settling Defendants have agreed to a Settlement to avoid the risk and cost of further litigation,” the BCBS settlement website shared.

The parties reached this settlement in October 2020 and the agreement has now been approved by the federal judge whose court handled the case.

In addition to the monetary compensation, BCBS companies agreed to business alterations. Those changes included eliminating national revenue caps and limiting local revenue caps. Large employers will now be able to bid for two Blues health plans, when previously they were limited to a single Blues plan for their national accounts.

The settlement reduced limitations on BCBS companies’ acquisitions and increased restrictions on most favored nations clauses and differentials. It also endorsed direct contracting between non-provider vendors and self-funded employers. BCBS companies also agreed to five years of surveillance.

A couple of other payers have faced antitrust challenges in the past year, perhaps most notable among them the Change Healthcare-UnitedHealth Group merger. 

As part of an effort to deter antitrust allegations, Change Healthcare has considered selling ClaimsXten, its payment integrity business. As of this publication, the payer and healthcare technology platform pushed back the deadline of their merger to December 2022.

Health insurance industry consolidation has increased over the past 20 years, according to the American Medical Association (AMA). The organization found that three-quarters of the metropolitan statistical areas fall under the category of “highly concentrated” insurance markets. In more than 90 percent of the markets, a single payer held 30 percent of the market share.

BCBS plans have been known to hold sway over the Affordable Care Act marketplaces, holding nearly 50 percent of the market share from 2016 to 2018, according to a Robert Wood Johnson Foundation report. Their primary competitors are public instead of private health plans.