A nearly $3 billion settlement with Blue Cross Blue Shield leaves providers with a big choice

Providers that contract with Blue Cross Blue Shield should assess whether they want to participate in a landmark class-action settlement over litigation stemming from complaints about the insurer’s business practices.

In October, a resolution reached between provider plaintiffs and Blue Cross Blue Shield Association (BCBSA), along with 33 of its member companies, resulted in a $2.8 billion settlement fund. Whatley Kallas, LLP, lead counsel in the litigation, said the settlement is the largest antitrust agreement in the history of U.S. healthcare.

The proposed settlement marked the end of 12-year litigation brought by providers over the business practices of BCBSA’s member companies. Business practices such as exclusive service areas for Blues plans are said to have hampered providers in contracting, added administrative burdens and affected payments.

In announcing the agreement, BCBSA said it continued to deny the plaintiffs’ allegations but wanted to move on from the prolonged litigation over the matter.

A previously settled lawsuit over similar complaints resulted in a $2.67 billion fund for Blues plan customers.

Partaking in the settlement

Providers may claim a share of the settlement if they treated a member of a Blues health plan between July 2008 and Oct. 4, 2024.

Many providers “will recover millions of dollars from the damages fund,” according to information filed by the plaintiffs’ attorneys. After attorneys’ fees that could reach $700 million, more than 90% of the fund is reserved for hospitals and facilities, with the remainder slotted for medical professionals.

Providers can opt out of the settlement if they prefer to pursue an individual claim against BCBSA, with the potential for triple damages under federal antitrust law. Unless they opt out within 90 days of receiving the final settlement notice, they will be designated as part of the settlement class. With the court and parties addressing details and potential sticking points, the finalized settlement notice likely will be available no sooner than 2025.

A hospital’s share of the settlement will be determined via a three-step process that entails:

1. Calculating the total allowed amount (i.e., the amount contractually owed by Blues plans to the hospital during the settlement period)
2. Calculating the adjusted allowed amount by applying a coefficient that represents the impact of Blue Cross Blue Shield’s conduct on the hospital, relative to other hospitals in the settlement (based on an undisclosed formula, with geographic location a primary input)
3. Dividing the hospital’s adjusted allowed amount by the total such amount for all facilities that have filed settlement claims

The default method for determining the allowed amount is for the hospital to submit its national provider identifier or tax identification number, with accountants representing the plaintiffs then computing the figure based on claims and sending it to the hospital for review. Alternatively, the hospital can derive its own billing data and submit the amount to the plaintiffs’ team.

Changes to business practices

In addition to damages, the settlement includes a requirement for Blues plans to implement transparency and accountability measures in the association’s BlueCard program over the next few years as a guardrail against anticompetitive behavior. Those accommodations, purported to cost well into nine figures, are not intended to be available to providers that opt out of the settlement.

For example, the program will be updated to make it easier for providers to gauge an out-of-market patient’s benefits and coverage eligibility, along with prior-authorization procedures and requirements for a particular service. Changes also will be designed to simplify claims tracking and facilitate the exchange of comprehensive clinical data.

With limited exceptions, Blues plans will have to pay clean, fully insured BlueCard claims within 30 days and will owe 8% annual interest on any such claim that is not promptly paid. In the event a claim is denied or remains unsettled, the plans must provide additional information that guides the provider in correcting any issues. If a provider’s error prevents the claim from being resolved, the plans must give an alert within 30 days.

The settlement also requires service-level agreements between BCBSA and individual Blues plans regarding providers’ eligibility and claims-status inquiries. A response must be generated within 20 seconds of a real-time inquiry and generally by the morning of the next business day for batch transactions.

Other changes are designed to increase out-of-area contracting opportunities by allowing a health system’s facilities to contract with the same Blues plan as an “anchor hospital” within the organization. The facility must be in the same state and within an hour’s drive of the anchor hospital, which must be part of the settlement class.

Some providers not on board

Roughly 15 emergency medical groups filed an objection with the court, saying their perspective and that of other emergency medical organizations were not adequately represented in the settlement talks.

In the filing, the groups noted that the named plaintiffs are in-network providers but that the class is proposed to also include out-of-network providers.

“The Blues plans have come to the settlement table to resolve not just in-network providers’ claims, but also out-of-network providers’ claims,” the motion states. “The record reflects serious questions about whether the settlement has been negotiated in a way to protect the interests of out-of-network providers, particularly out-of-network emergency providers.”

One concern is that basing settlement allocations on allowed amounts, as determined in contracting with Blues plans, does not account for the distinction between in-network and out-of-network rates. The groups lodging the objection “have not received a full understanding of the damages model and an opportunity to test the rates at issue before any settlement is preliminary approved.”

The opt-out pathway might not be practical, according to the motion, because the settlement language indicates that if in-network affiliates choose to participate, co-existing legal claims against Blues plans by out-of-network providers could be negated.

The providers say those claims should be deemed outside the scope of the settlement and should be allowed to stand regardless of settlement decisions made by their in-network affiliates. If the court does not see fit to make that distinction, they say the settlement should not be allowed to proceed.