In October 2024, Blue Cross Blue Shield (“BCBS”) agreed to a $2.8 billion settlement to resolve allegations of anti-competitive practices in the health insurance market – it is reported to be the largest settlement in a health care antitrust case to date. This landmark case has drawn significant attention from policymakers, health care advocates, and consumers alike, highlighting the complexities of the health care system and its relationship with fair competition.
The settlement stemmed from a class action lawsuit filed in 2012, which accused BCBS of engaging in practices that limited competition among its member companies. The plaintiffs argued that BCBS’s licensing agreements, which allowed local insurers to use the BCBS brand, divided the country into exclusive areas, which effectively insulated them from competing with each other. For example, it was alleged that certain plans had monopolies in their state on the Blues brand, national employers who sought out a BCBS contract typically had to work with the BCBS plan in the state where the employer was headquartered, and the BCBS plans would then share the rates that they had contracted with health care facilities and practitioners in their state with other BCBS plans, using the Blue Card. According to the lawsuit, the nationwide conspiracy resulted in the increased cost of insurance and decreased reimbursements to providers.
In addition to the $2.8 billion to be paid, BCBS agreed to implement significant changes to its business operations, which are expected to cost hundreds of millions of dollars. Among other things, the non-monetary portion of the settlement includes a directive for BCBS to create a system-wide information platform that facilitates member benefits, eligibility verification, and claims tracking. The parties reported that these directives are intended to create more transparency, efficiency, and accountability between BCBS and its insureds. According to the parties, providers will also gain more contracting opportunities with BCBS under the settlement terms.
The $2.8 settlement by BCBS marks a significant turning point in how BCBS will operate its Blues plans going forward. Changes resulting from the settlement will impact not only how Blues plans interact with each other but also how the plans interact with providers and policyholders.
