Blue Cross of Minnesota to pay $71M as part of nationwide antitrust settlement

Health insurer Blue Cross and Blue Shield of Minnesota expects to pay $71 million as part of a nationwide settlement with health care providers that alleged companies using the Blue brands have stifled competition for decades in health plan markets across the country.

The national settlement, announced in October, creates a $2.8 billion fund to pay damage claims from health care providers in states where more than two dozen insurers operate.

It also requires operational changes at Blue Cross and Blue Shield insurers, which are separate companies that share a brand and utilize one another’s provider networks through the “Blue Card” system.

The insurers denied the allegations when the settlement was announced last fall, insisting their structure has provided access to high-quality care while promoting affordability.

The original lawsuit filed in 2013 argued that health care providers received significantly less compensation because market dominance by the Blues blocked health plan competition that would increase payment rates.

Plaintiffs contended that Blue Card inefficiencies have long created costly administrative burdens that are part of a broader anti-competitive structure among the insurers, ranging from price fixing to agreements that prohibit competition among member companies.

A trade group for the carriers offered no comment on the disclosure by Eagan-based Blue Cross of Minnesota. The health plan also did not comment on its April 30 filing with state regulators that revealed its share of the national settlement.

“If finally approved by the court, the provider settlement agreement will require the defendants to make a monetary settlement payment, the company’s portion of which is estimated to be $71 million and will contain certain non-monetary items,” Blue Cross of Minnesota said in a footnote to its audited financial statement.

A judge has scheduled a July 29 hearing to consider the fairness of the proposed class action settlement.

Health care providers may file claims if they currently or in the past provided health care services, equipment or supplies to any patient covered by one of the settling Blue insurers from July 24, 2008, through Oct. 4, 2024.

“In addition to the substantial damages fund, the settlement outlines crucial changes in the business relationship between Blue Cross Blue Shield Association member plans — all 33 independent Blues — that will transform the Blue Card program," plaintiff attorneys said in a statement. “The settlement also affects how the Blues process claims, communicate with, and make payments to health care providers.”

The settlement document filed with the court says that “nothing in this agreement will constitute or be construed as an admission of liability or wrongdoing by any settling defendant. ... Settling defendants expressly deny any wrongdoing or liability whatsoever for any and all such claims and allegations.”

For decades, health insurers using the Blue Cross and Blue Shield brands have been powerful forces in health insurance markets, with critics arguing they have used their size to thwart meaningful competition. Minnesota’s Blues plan is the state’s largest Medicare Advantage insurer and state data often shows it as having the biggest share of the market where fully insured employer groups buy coverage.

In December, the American Medical Association released its annual report on competition in health insurance markets across the country, which concluded markets over the past decade “have remained stubbornly and highly concentrated, and at risk for mergers to substantially lessen competition.”

Eden Prairie-based UnitedHealth Group was the largest U.S. commercial health insurer in 2023, the report found, but the market share of Blues insurers at the state level is often much higher. For example, Blue Cross of Minnesota provides more commercial insurance to Minnesotans than any other insurer, according to the AMA, which groups together coverage for employers and individuals.

Regional markets in Minnesota are highly concentrated, the AMA found, although less so than most regional markets across the country.

In a complaint filed by a different set of plaintiffs in the same multi-district litigation, Blues plans in 2021 collectively agreed to pay $2.67 billion to settle a lawsuit from health insurance subscribers that’s related to the litigation from health care providers.

In settling the subscriber case, the Blues struck an agreement to maintain exclusive service areas for the Blue Cross and Blue Shield plans, but altered specific agreements to promote competition.

For example, one provision in the earlier settlement eliminated caps on revenue that the companies can generate by selling coverage through affiliates that don’t use the Blue Cross and Blue Shield trademarks, in hopes that companies would compete beyond their designated service areas.

Another provision in the subscriber settlement would let certain large employers seek a competing bid from a second Blue Cross and Blue Shield insurer, where rules had limited employer choices to the local Blues carrier.

If approved by the court this summer, the health care provider settlement “will hold Blue Cross and Blue Shield plans accountable for timely communication and payment; transparent decision-making and dealings with third parties; and timely claims status updates,” according to plaintiff attorneys. “The settlement also gives providers increased contracting opportunities with the Blues.”