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Smart Benefits: Blue Cross Blue Shield RI Gets Rate Hike Approval

Monday, February 18, 2013

 

Rhode Island's health insurance commissioner has approved rate increases for Blue Cross Blue Shield RI.

Rhode Island’s Health Insurance Commissioner, Christopher Koller, has approved BCBSRI’s mid-year request to increase rates, but not by as much as the insurer had hoped.

In September 2012, BCBSRI, UnitedHealthcare and Tufts Health Plan were all approved for 2013 premium increases – the lowest average rate increases for employers in Rhode Island in recent years. But now, OHIC has approved BCBSRI’s rate hikes for both small and large group employers starting with April renewals:

  • Small Groups: OHIC approved a 3.67% increase, more than the 1.65% September rise but below the 5.10% BCBSRI recently requested.
  • Large Groups: While the insurer requested a 9% increase, BCBSRI was approved for 7.87%, up from 3.98% set in September.

These averages are adjusted for group specific factors, which may increase or decrease rates further.

Why Now?

BCBSRI estimated a 2012 commercial group operating loss of $40.7 million, which would reduce its reserves to $246 million. In its latest rate request, BCBSRI estimated that, if OHIC denied its increase entirely, its reserves would drop even further – to $232 million by the end of 2013. Insurance carriers are required to carry enough reserves to pay claims in case an extraordinary or catastrophic event occurs, and BCBSRI’s projected level is much less than the target of $358 million set by OHIC.

BCBSRI also stated that unanticipated increases in outpatient and inpatient care due to recent advances in treatment innovation were not realized when they originally filed for the September rate increase, and added unanticipated financial consequences.

The Catch

Koller’s approval comes with strings attached. He is requiring BCBSRI to meet four conditions:

Affordable New Plan Options. By May 1, 2014, BCBSRI will be required to offer at least one new, affordable health insurance plan priced at least 15% less than the price of a plan with comparable benefits. The plan(s) must incorporate financial incentives for BCBSRI subscribers to use providers that have agreed to offer health care services with price discounts and utilization procedures designed to achieve the plan’s affordability goal.

One new product that fits the bill is Select RI, which teams with Coastal Medical providers. With Select RI, BCBSRI incents the consumer to select physicians who are part of Coastal Medical, the state’s leader in patient-centered medical homes – an approach that reduces practice costs and improves patient care delivery. Behind the scenes, BCBSRI and Coastal Medical have entered into a shared savings contract designed to help to reduce costs.

Updated Medical Expense Data. OHIC requires that BCBSRI file complete 2012 medical expense data by March 2013. If OHIC determines that it’s justified, BCBSRI may then request an additional increase of no more than 0.63% for small and large employers.

Financial Recovery Plan: BCBSRI must file a report on its financial recovery plan on a quarterly basis in 2013 to ensure that it’s making adequate progress in addressing its financial condition.

Monitoring: BCBSRI must meet with OHIC on a quarterly basis to review its compliance with the affordable insurance plans condition described above.

For details of the December 2012 BCBSRI submission final decision, visit www.ohic.ri.gov

Amy Gallagher has over 19 years of healthcare industry experience. As Vice President at Cornerstone Group, she advises large employers on long-term cost-containment strategies, consumer-driven solutions and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, is a member of local organizations like the Rhode Island Business Group on Health, HRM-RI, SHRM, WELCOA, and the Rhode Island Business Healthcare Advisory Council, and participates in the Lieutenant Governor’s Health Benefits Exchange work group of the Health Care Reform Commission.

 

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