On October 14, 2024, Plaintiffs representing a class of health care providers for In Re Blue Cross Blue Shield Antitrust Litigation reached a settlement agreement against the Blue Cross Blue Shield Association and its member companies (“BCBS”) for allegations of suppressing competition and underpaying providers. BCBS will pay $2.8 billion to a Settlement Fund and implement transparency and accountability measures within BCBS to ensure the alleged anticompetitive behavior does not continue. This settlement follows the $2.67 billion settlement finalized earlier this year with subscribers. Health care providers must now decide to participate in the proposed settlement or opt out and assert their own claims.
Background
Over a period of 12 years, health plan subscribers and health care providers sought legal action against BCBS, alleging BCBS violated the antitrust laws by allocating markets through exclusive service areas and fixing prices paid to health care providers through the BlueCard program. These actions suppressed competition and allegedly caused BCBS to overcharge subscribers while providers were underpaid.
In order to “put years of litigation behind us,” BCBS agreed to settle the matter. The proposed settlement includes a $2.8 billion fund to reimburse providers and a commitment to make operational changes within the BCBS organization to prevent future anticompetitive conduct. The proposed settlement is subject to approval by the Alabama federal court, and the fairness hearing is currently scheduled for November 14, 2024.
Qualifying Providers
To be eligible to participate in the settlement, practitioners, health systems and owners and operators of “Other Facilities” must have treated BCBS patients between July 2008 and October 2024. For settlement allocations, health systems and other facilities constitute one reimbursement group, while providers constitute a second.
Plan of Distribution
Provider payments under the settlement agreement are based on (1) whether the individual provider opting in is a hospital, other facility or practitioner, and (2) the Allowed Amounts under the BCBS reimbursement during the relevant time period. Prior to distribution, class attorneys requested a 25% distribution ($700 million) as well as an additional approximately $100 million for class marketing and similar expenses, leaving approximately $2 billion in the settlement fund.
Plaintiffs’ economists estimate that (a) the impact of the BCBS conduct was 3.5 times larger on “health care facilities,” including general acute care hospitals and other facilities such as outpatient centers, ambulatory surgery centers, etc., than on individual practitioners and practitioner groups, and (b) 65% of individual practitioners and practitioner groups released their claims in a similar action finalized earlier this year. Therefore, the proposed settlement will distribute 92% of the settlement fund to health care facilities. Those providers that did not opt in to the prior settlement will share in the final 8% of the fund.
Providers and health systems have two potential methods to determine the Allowed Amounts BCBS paid the provider in the relevant period. For hospitals and other facilities, providers may choose between:
- Default Method: allows health care facilities to provide Plaintiffs’ experts with their tax identification number (“TIN”). Plaintiffs’ experts will then identify the total Allowed Amounts in their database associated with the TIN, extrapolate for missing data and then provide the Allowed Amount to the opt-in provider to allow for corrections.
- Alternative Method: allows providers to extract their own data for their billing and records system and present their data to the Plaintiffs’ experts.
Non-facility providers can similarly choose between the Default Method where Plaintiffs’ experts utilize their existing database or the Alternative Method of providing their own data; however, non-facility providers will have their data analyzed in $250,000 increments, rather than exact figures.
Once the Plaintiffs’ experts and the opt-in provider agree to the Allowed Amount, the Plaintiffs’ experts will adjust the Allowed Amounts by applying a regression model to estimate the impact of BCBS’s conduct on that specific provider. This model determines a provider’s total Adjusted Allowed Amounts by TIN. Providers are then entitled to their pro rata portion of the respective settlement fund based on the total Adjusted Allowed Amounts for all opt-in health care providers to each fund.
Other Terms of the Settlement
Other key terms include:
- Allowing hospitals in certain areas to renegotiate aspects of their contracts with BCBS;
- Creating more transparency on the use of third parties accessing provider data;
- Instituting a real-time messaging system to allow BCBS plans to address certain provider issues;
- Preventing BCBS from requiring providers to participate in certain non-Blue networks as a condition to participate in BCBS plans; and
- Imposing a monitoring team to oversee aspects of BCBS’s compliance with the settlement agreement.
Practical Takeaways
Providers, including health systems, hospitals and other provider groups, should weigh the difference in the potential recovery from either participating in the settlement fund or opting out and submitting their own legal actions against BCBS in the near future to preserve their legal rights. Considerations should include the type of provider and available funds, the volume of services provided to and revenue associated with BCBS-treated patients, and potential litigation costs of opting out of the proposed settlement. A Hall Render attorney can assist in the evaluation of potential damages claims and help health care professionals determine whether opt-out litigation is appropriate.
If you have questions regarding this litigation, or whether you or your company should opt in or opt out of the settlement fund, please contact:
- Michael Greer at (317) 977-1493 or mgreer@hallrender.com;
- Nathan Chubb at (202) 780-2991 or nchubb@hallrender.com;
- Liliann Stoll at (303) 557-2119 or lstoll@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
