(Crain’s) — After surging earlier in the year, profits of the parent of Blue Cross & Blue Shield of Illinois dropped sharply during the second quarter, to a still hefty $270 million, as benefits rose and membership shrank.

Chicago-based Health Care Service Corp’s net income fell nearly 23% during the second quarter compared with almost $350 million in the year-earlier period. The fourth-largest insurer in the U.S. has a tight grip on the health insurance market in Illinois, making its performance a matter of keen interest to employers, employees and people who buy individual insurance policies.

“They’re far and away No. 1,” said Joel Peyton, an analyst who studies the Illinois insurance market at Nashville, Tenn.-based research firm HealthLeaders-InterStudy. “I don’t see that changing anytime soon.”

Health insurance profits are expected to come under increased scrutiny because of a new law—part of the federal overhaul of health care—that requires the companies to pay a fixed percentage of revenues on medical care and activities that broadly improve health care, such as patient education.

Quarterly fluctuations in net income are not unusual for health insurance companies. Health Care Service’s second-quarter showing was offset by the insurer’s strong first quarter, when profits soared to nearly $437 million.

As a result, Health Care Service’s net income rose 13.2%, to $706.3 million, during the first half of 2011, compared with $623.9 million during the first half of 2010, according to a second-quarter statement the company filed with the National Assn. of Insurance Commissioners, which is a clearinghouse for insurance financial information.

For Health Care Service, rising benefit expenses are inherent in having a large claims base, and the company’s membership continually changes, a spokesman said.

He added that the drop in net income was partly caused by a lower rate of return on short-term investments, which he declined to provide.

The financial reports only cover Health Care Service’s insurance operation. Not included is its low-margin, fee-based work administering health plans for self-insured clients.

“It’s very difficult to look at our filing and get a full picture of the business,” the spokesman said.

Health Care Service is a mutual company, owned by its policy holders.

Insurance companies report their financial results on a cumulative, quarterly basis. Crain’s calculated Health Care Service’s second-quarter results by subtracting its first-quarter results from those for the first six months.

Profits plummeted in the second quarter even though revenue rose 4.5%, to $4.93 billion, compared with $4.72 billion for the year-earlier period. Benefit expenses, money spent on health care, climbed 3.6%, to a little more than $4 billion, in the second quarter, compared with $3.9 billion in second-quarter 2010.

Membership slipped 1.5%, to about 7.62 million, in the second quarter, compared with 7.73 million members in second-quarter 2010, when the company’s enrollment was boosted by Unicare Inc.’s exit from Illinois and Texas, states where Health Care Service is strong.

“Given the current economic and competitive environment, (Health Care Service) and the health insurance sector as a whole will continue to be challenged with organic membership growth over the next year,” according to a report by Moody’s Investors Service issued on July 12, before the company released its second-quarter results.

Health Care Service’s net profit margin tightened to 5.5% during the second quarter, compared with 7.4% for the year-earlier period.

The company wrote 54.1% of all small group plans and 71.9% of all large group plans issued in Illinois in 2010, according to a report earlier this year by the National Assn. of Insurance Commissioners, which is based in Washington, D.C.

During the second quarter, Health Care Service paid off $400 million in debt.

That loan was essentially replaced with $500 million in unsecured notes that the company issued earlier this year. Those notes, at an interest rate of 4.7% a year, come due on Jan. 15, 2021, according to Health Care Service’s second-quarter filing.

Tags: BCBS 2011 profits, BCBS profits, BCBSIL profit drop, Health Care Service Corp proftis 2011

The CEO of the nonprofit health insurance company Blue Shield of California, Bruce Bodaken, earned $4.6 million in 2010, according to documents made public by the California Department of Insurance Wednesday. Blue Shield paid its top ten executives more than $14 million combined last year. In January of this year, after Blue Shield announced its third major increase in less than a year, the nonprofit Consumer Watchdog sent a letter to Bodaken demanding that he disclose his annual salary. After public protests at Blue Shield headquarters and sharp criticism from Insurance Commissioner Dave Jones the company to withdrew plans for the third rate hike, but had not disclosed executive salaries until yesterday.

Legislation being considered in the California Assembly, AB 52 (Feuer), would authorize regulators to deny health insurance company rate increases on the basis of excessive administrative and overhead costs, including executive salaries. Blue Shield and other insurance companies have been aggressively opposing the legislation.

“When a nonprofit insurance company’s CEO makes more than four million dollars a year, but patients can’t keep up with rate hikes, then something has to change,” said Consumer Watchdog Executive Director Doug Heller. “Blue Shield’s CEO has become the poster child for the insurance company greed that must be stopped.”

In its letter to Bodaken in January – http://www.consumerwatchdog.org/resources/bs_letter012011.pdf – Consumer Watchdog wrote:

“The burden imposed on hundreds of thousands of Blue Shield customers by the company’s massive rate hikes is almost unfathomable…Blue Shield has been able to drastically increase rates on policyholders without disclosing compensation to its executives. The public, and the policyholder members of your “not-for-profit mutual benefit corporation,” have a right to know how much you and your top management team earn.”

Consumer Watchdog estimates that it takes the annual premium of more than 1,000 Blue Shield policyholders to cover Bodaken’s salary and more than 3,500 policyholders to cover the pay packages for the top ten Blue Shield executives. Under Proposition 103, which regulates the rates and premiums of auto and homeowners insurance the way proposed in AB 52, the insurance commissioner can limit how much policyholder premium can be used to pay executives.

“It costs Californians so many hard earned dollars to pay for health insurance, we should be making sure that our premiums aren’t being wasted on corporate excess, waste and fraud,” said Heller. “Since we can’t afford to go without health insurance, it is imperative that we regulate insurance companies to stop the gouging.

AB 52 will be voted on by the Assembly Appropriations Committee on Friday and, if passed, will go to a vote of the entire Assembly by June 3.

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org

SOURCE Consumer Watchdog

Tags: BCBS CA CEO Salary, BCBS California 2010 CEO salary

As of June 1, 2010 Blue Cross and Blue Shield of Illinois (BCBSIL) is offering new Medicare Supplement Insurance Plans G and N. Members and those considering Plans G and N can enroll at anytime; there are no specific enrollment periods or deadlines. The changes to the configuration of Medicare Supplement plans are the result of the “Medicare Improvements for Patients and Providers Act of 2008” (MIPPA), which took effect on June 1.

All plans sold after June 1 have an enhanced hospice benefit, which includes coverage for some outpatient prescription medications and copayments and coinsurance for inpatient respite care, which were previously the responsibility of the insured.

These 2 plans are essentially replacing Plans D and E. Plan D is comparable to plan G but not quite as popular a plan. Plan E is a casualty of the Medicare Modernization Act of 2003 and can no longer be sold by any company. Folks who currently have Plan D or E from BCBS of IL are “grandfathered” in and can keep these plans because they are guaranteed renewable for life.
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Tags: BCBSIL Plan G, BCBSIL Plan N, Blue Cross and Blue Shield of Illinois New Medicare Supplement Plans, Blue Cross Blue Shield Illinois 2010 Medicare Plans 2010

BlueCare Dental provides members with access to the nation’s largest dental care network of access points, with more than 152,000 nationwide.* With so many access points, BlueCare Dental members have great flexibility to see a dentist and use their BlueCare Dental benefits when and where it is convenient for them.

BlueCare Dental providers are credentialed, and the network has the largest number of dental access points in many states, including Illinois. Across the state, members will find 5,711 access points.** In fact, contracting dentists are located in all 50 states. Also, the average provider discount in Illinois is 32.6 percent (based on the average in-force fees).

With Blue Access® for Members (BAM) at www.bcbsil.com, it’s easy for members to select a dentist because they can search for a provider online any time. BAM’s Provider Finder® tool is updated weekly with new network information.

Tags: BCBSIL Dental Network, Blue Cross Blue Shield Dental Network

For existing Blue Cross and Blue Shield of Illinois individual plan members who were members prior to June 1, 2009, the open enrollment window to enroll dependents under age 26 (and eligible military veterans under age 30) will take place from January 1, 2010 through March 31, 2010. Please note that beginning in November 2008, BCBSIL stopped removing dependents from coverage who would have otherwise aged out.

This pertains to the new law in Illinois that allows young persons under age 26 to join their parents have health insurance policy as a dependent as long as they are not married until their 26th birthday. This also applies to young persons under the age of 30 whose mom or dad served in the military as long as the young person lives in Illinois and is unmarried.

To obtain Blue Cross and Blue Shield of Illinois individual plans and quotes, visit the BCBSIL website.

Tags: 2009 Illinois dependent age limitation, BCBSIL individual plans for dependents, Blue Cross and Blue Shield of Illinois under 26, Blue Cross Blue Shield of Illinois - dependent law change, Illinois dependent age change, Illinois health insurance dependent law change

Blue Cross and Blue Shield of Illinois (BCBSIL) has added one of the largest online social media tools, Twitter, to its online presence. Like instant messaging to the masses, Twitter allows us to see what is being said about BCBSIL, send replies to anyone commenting on us, and broadcast information about programs, successes and opinions for all to see.

Twitter is one of the fastest growing social media tools on the Internet, growing by 50 percent every few months. Top companies are using Twitter and other social media tools to engage customers and prospects in a live, real-time conversation that is one-to-one, but viewed by many. Among those using Twitter are
Starbucks, American Heart Association, American Red Cross, Centers for Disease Control, Southwest
Airlines and Whole Foods.

The Blue Cross Blue Shield of Illinois Twitter account will be used as a crisis communications and public affairs bulletin board, as well as a promotional and marketing communications tool. Examples of things BCBS of IL will post to Twitter include an announcement of a new major account BCBS of IL signed,
health and wellness tips from Blue Care Connection®, milestones in membership or provider network growth, and important up-to-the-minute information during natural disasters. Also, BCBS of IL will use Twitter to start conversations and get testimonials from our members.

You can sign up to track Blue Cross Blue Shield of Illinois Twitter posts by joining the Twitter community. It is free to set up an account, and Twitter is easy to use. Just go to www.twitter.com to get started, and then search for twitter.com/bcbsil.

Tags: blue cross blue shield of illinois twitter, twitter

Fertility Center of Illinois (FCI) is terminating its contract with WIN Fertility, a subsidiary of WIN Healthcare, effective February 28, 2009. WIN is working on a transition plan with FCI and will notify Blue Cross and Blue Shield of Illinois (BCBSIL) HMO members who are affected by this network change. Letters that include information on treatment options, such as requesting Transition of Care services, will be sent to these members. Also, BCBSIL’s online fertility directory in the HMO Provider Section has been updated.

Tags: Fertility Center of Illinois

Blue Cross Blue Shield of Illinois announced improved pricing with PrimeMail, their contracting mail service pharmacy. Pending regulatory approval, they begin implementing this pricing for non-HMO business in February 2009.

The new pricing will use the same maximum allowable cost (MAC) reimbursement methodology for generic drugs that is used for the retail pharmacy network, thus eliminating any pricing discrepancies between retail and mail service and making mail service an even better value for our customers. The use of MAC pricing establishes a maximum reimbursement amount for a generic medication regardless of the manufacturer.

The change to MAC pricing at mail will improve overall discounts on generic drugs by an average of 9 percent and reduce total mail-service costs by approximately 5 percent. While the vast majority of members will pay less out-of-pocket as a result of this change, some members’ prescriptions may be more expensive. Letters will be sent to those members who may experience an increase in out-of-pocket expense under this new arrangement.

The following provider types have been added to the Blue Cross Blue Shield of Illinois PPO network for individual policies: Durable Medical Equipment (DME), Home Infusion Therapy (HIT), Advanced Practice Nurses (APN), Orthotics, Prosthetics and Optometrists. Members with individual policies associated with physician networks were mailed notices about the addition of these new providers in the November 2008 BCBSIL annual member mailing. These provider types were made available to group markets members in 2007.

For the most current PPO network information, members should use the Provider Finder® tool at www.bcbsil.com. Members first select their individual health plan from the drop down menu, then choose either provider name or provider type and click “Go.

Effective January 2009, a redesigned Blue Cross and Blue Shield of Illinois ID card will be issued to Individual Markets members. The redesigned card is the result of new Blue Cross and Blue Shield Association guidelines to standardize ID cards among Blues plans. The new format includes key variables that will make it easier to identify the member’s coverage. Also, the new format includes a magnetic stripe on the back that contains subscriber name, birth date and member ID number.

The new format will first be issued to new members and existing members who request an replacement/new ID card in 2009. New ID cards will be issued to all members by January 2010. The new ID card replaces a wide variety of formats and card stocks currently in use.