bcbsnc-pays-record-fineOn September 15, 2016, the North Carolina Department of Insurance (NC DOI) and Blue Cross Blue Shield of North Carolina (BCBSNC) announced a voluntary settlement in an ongoing investigation into a long string of complaints against BCBSNC. As a part of the settlement, BCBSNC will pay $3.6 million to the state and be earmarked for the public school system.

Among the complaints received by the NC DOI are accusations that BCBSNC incorrectly over-charged policy holders and failed to refund the excess premium in a timely manner. There were also several complaints of customers receiving policy cancellation notices incorrectly. As a result of the many problems BCBSNC had, the customer service call center was also inundated with complaints which led to extremely long wait times for callers.

This settlement is the largest fine ever issued by the NC DOI to a single company. The second largest fine was also issued to BCBSNC in 2003 for more than $1.8 million for improperly handling over $17 million in emergency room claims. According to terms of the agreement, the payment for the current fine will come out of BCBSNC’s surplus and not be passed through to consumers’ premiums.

This settlement culminates ongoing negotiations with BCBSNC and the NC DOI over not only the complaints from consumers, but also whether or not BCBSNC would continue to offer individual plans on the federal Marketplace. Back in February, the CEO of BCBSNC, Brad Wilson, said that the company may pull out of the Marketplace in 2017 as a result of continued financial losses by the company. There was also speculation that BCBSNC was using the threat of leaving as leverage in negotiating their penalty with the NC DOI.

One requirement of the Affordable Care Act for organizations leaving the Marketplace is that they give 180 days’ notice. With this extended time period already passed, BCBSNC appears to be locked into offering individual plans at least through 2017. If they do decide to stop offering coverage through the Marketplace, they would not be allowed to re-enter for five years.

W. Hunter Walton

W. Hunter Walton

Principal, Health & Welfare Consultant - Hunter provides advice and guidance to clients on the design, implementation and management of corporate benefit strategies. Hunter’s time spent consulting for the federal government in Washington, D.C., provides HCW and our clients with unique perspective and solid insight regarding healthcare reform.
W. Hunter Walton