Blue Cross: Who Is Holding the Bag?
In mid-November, Blue Cross Blue Shield of Rhode Island applied for a 12% rate increase of its direct pay (i.e., non-group) products. Public hearings have been under way.
On December 13, 2007, US Attorney Robert Clark Corrente announced that as a part of Operation Dollar Bill, his office had reached an agreement with Blue Cross “under which the insurer will pay $20 million to resolve matters related to the government’s ongoing public corruption investigation” but that Blue Cross will not “seek any rate increases specifically to recoup the $20 million.”
In a Providence Business News article posted December 13, 2007, however, the President of Blue Cross, James E. Purcell states that:
“The actual negotiations have been over the past several months and we concluded them just the other day.”
So Blue Cross was fully cognizent when it applied for this rate hike that it was facing a hefty monetary penalty.
Blue Cross is a non-profit organization. Its prime source of revenue is subscribers. If expenses rise, rates rise. Expenses rose in 2007 by $20million.
Is the substantial fine a part of the reason for the present rate hike request? Is a similarly motivated rate hike request for Blue Cross’ other products in the works?
Blue Cross filings in support of the rate hike request lay out an elaborate case that the hike is or will be needed to maintain its reserves. Really? Affidavits by officers, directors and managers of Blue Cross that proceedings from this rate increase will not go towards the $20million fine or to replace existing monies that went to the $20million are not to be found among the filings. On that basis alone, the Health Insurance Commissioner must deny this rate increase request. In fact, unless and until the US Attorney’s office reconsiders the $20million fine or correctly redirects it to the guilty parties, the Commissioner has no choice but to deny all future rate increase requests by Blue Cross.
Otherwise, Blue Cross subscribers will be left holding the wrong bag for the brown bag activity of Blue Cross.