Health Plan Weekly

Although Blue Cross Blue Shield plans’ margins started rising again in 2023 after a two-year slump, industry analysts say that a diverse array of factors could prevent continued margin expansion among the Blues this year.  

“We don’t question that Blues overall will probably remain profitable…but the improvement in the margins in ’23 probably is not going to reoccur [this year],” says Bridget Maehr, director at the insurance-focused credit rating firm AM Best. “We’re probably going to see a little bit more of a normalization of margins.” 

According to a new analysis from Mark Farrah Associates, Blues’ aggregate profit margin — net income divided by total revenues — swelled to 6.1% in the third quarter of 2020. During that time, the uptick in COVID-19-related care was far outpaced by declines in routine care, causing coffers to fatten across the insurance industry. Blues’ aggregate margin then declined to 3.9% by the third quarter of 2021, and it fell further to 3.0% in the third quarter of 2022.  

A vocal contingent of providers has argued that the No Surprises Act (NSA), the 2020 law that banned surprise medical billing in most cases, has limited their ability to get fair in-network rates from insurers, disincentivizing network participation. However, experts say that this complaint misses the point of the reform — and recent data indicate that the opposite of what providers argue may be true. 

The NSA stipulates that when a patient is being treated by an out-of-network provider without having agreed to it first — which often happens in emergency rooms — the provider can only charge the patient their maximum in-network cost sharing amount. If there is an outstanding balance after the patient is billed that amount, the provider has two options for payment: The provider can either accept the median in-network rate for the care in question, or submit the disputed bill to a binding arbitration process called Independent Dispute Resolution (IDR).  

The rule that CMS finalized last month regarding prior authorization (PA) should help streamline the increasingly scrutinized process and lead to faster decisions, according to panelists who spoke during a KFF webinar on Feb. 22. However, they noted that regulation did not apply to employer-sponsored plans or state-based exchange plans and did not address how PA decisions are made and the clinical criteria plans use in determining which procedures are subject to PA. 

Troyen Brennan, M.D., former chief medical officer at CVS Health Corp. and Aetna, noted that the rule did not include prescription medications, which are often subject to PA — a process that draws the ire of providers who worry that delays could worsen patient outcomes. The CMS Interoperability and Prior Authorization Final Rule also required insurers to have a PA application programming interface (API), where providers can access information, although the regulation did not require them to disclose PA data on medications.  

Micky Tripathi, Ph.D., National Coordinator for Health Information Technology, touted the Biden administration’s progress on implementing regulations mandating the interoperability of health care systems and price transparency during a Feb. 22 Health Affairs event. He also described himself as an “AI optimist,” but emphasized the administration’s position that artificial intelligence tools must not exacerbate or worsen health inequities. 

With increasing interoperability and EHR adoption, Tripathi said, the Biden administration expects that providers, health plans and public health officials will be able to make smarter decisions using population health data. They will also have to meet standards set by the Office of the National Coordinator for Health Information Technology (ONC) to comply with quality measures used by CMS, among other organizations, Tripathi said. He also said that a focus on health equity is a key consideration in recent regulations governing AI. 

The federal government received 13 times more surprise billing disputes in the first half of 2023 than it initially estimated to receive over the course of a full calendar year, according to new CMS data.

The No Surprises Act (NSA), passed in 2021, established a Federal Independent Dispute Resolution (IDR) process that out-of-network providers and insurers can use to determine the OON rate for qualified IDR items or services after an unsuccessful open negotiation period. That process replaces the pre-NSA status quo of an OON provider sending a surprise bill to a patient. Of the 288,810 disputes filed through the Federal IDR portal over the first six months of 2023, about 46% were closed, with providers winning 77% of payment determinations.