Blues to refund $100 million, citing drop in claims

Karen Bouffard
The Detroit News

Blue Cross Blue Shield of Michigan and Blue Care Network will return more than $100 million to many fully insured customers this year due to the lack of non-coronavirus health services provided during the COVID-19 pandemic, the Blues announced Wednesday.  

“We are living through a great disruption in health care economics, and there is still a lot of uncertainty about where health care spending will go this year,” BCBSM President & CEO Daniel J. Loepp said in a press release.

“But at this point in the pandemic, we’re confident in premiums exceeding claims for the year — so we are starting to give money back to our customers. We hope these refunds allow businesses across Michigan to better cover their employees’ health care and provide our members some relief during a difficult time.”

The state's largest health insurer will return portions of premiums paid by businesses with small group health plans, large employers with dental and vision coverage, seniors with Medigap plans, and about 237,000 individuals who purchased marketplace plans under the federal Affordable Care Act in 2019. 

The company said the refunds are in addition to $494 million that Blue Cross Blue Shield of Michigan has invested in expanding the availability of no-cost benefits for members and to support health providers in response to COVID-19 — bringing the company's commitment in response to the crisis to nearly $600 million. 

Listed in the Blues' announcement:

  • Fully insured small group customers with 50 or fewer employees — about 23,000 small businesses — will receive a 30% credit on their July premium invoice, totaling about $37 million back to small group customers for their medical plans. 
  • Fully insured groups with dental and vision coverage will receive a one-month premium refund to be credited on their July invoice, totaling about $10.5 million; the Blues also will not increase rates for fully insured customers renewing dental and vision plans for 2021.
  • About 237,000 individual health plan members will receive one-time rebates in September based on premiums they paid in 2019, totaling about $45 million. 
  • Medigap and individual Medicare Advantage members in plans with premiums above $0 will receive a 15% refund for March and April to be applied to their July premium bills — totaling about $15 million in all. For Individual Medicare Advantage members this includes their optional supplemental buy-up, if applicable. 

Andy Hetzel, vice president for corporate communications with Blue Cross Blue Shield of Michigan, noted that Blue Care Network's premium costs decreased by an average of just over 1%, and Blue Cross PPO premiums decreased by an average of just over 7% for the current year.

Those decreases followed rate increases of just over 1% for Blue Care Network plans,and a little more than 4% for Blue Cross plans the previous year, he said.  

"So this rebate that we're paying our individual members comes after two very good years of news for them on the premium side," Hetzel said. "We're really pleased to be able to deliver this money back to our individual members now, especially since so many people are going through some economic hardship."

Under the federal Affordable Care Act, marketplace plans are required to meet standards for health care-related spending, called medical loss ratios, or they must refund money to customers, according to the Michigan Department of Financial and Insurance Services. 

Individual and small group insurers must spend at least 80% of premiums on medical and health care quality improvement. Large group insurers must spend 85% of premiums on medical and health care quality improvement. 

"(W)e anticipate issuing guidance to health insurers as they move to issue refunds to their customers due to under-utilization during the COVID-19 pandemic," Laura Hall, a spokeswoman for the state department, told The Detroit News in an email on Wednesday.

Hetzel said the rebates announced Wednesday don't include 2020 individual health plan members, or fully insured larger group customers with more than 50 employees.

The company is continuing to monitor the economic impacts of the coronavirus crisis on individual 2020 Affordable Care Act plans, and may issue rebates to those customers, Hetzel said.

"We're going to continue to watch their health care claims trends this year, with the intent to do something for those customers later in the year if the claims trends continue to trend downward," he said. 

"We have to continue to work with the federal Centers for Medicare and Medicaid Service to make sure that any premium relief we provide our customers this year conforms to federal regulations and guideline," he added.

"We don't want to do something prematurely in terms of premium relief that potentially jeopardizes those members' eligibility for the subsidies and tax credits that are provided by the federal government for their coverage."