BCBS of Texas to drop individual PPO plans

In an effort to stop the bleeding, the largest individual carrier in one of the largest states in the nation has made the bold decision to drop its individual PPO plan both on and off the exchange. Blue Cross Blue Shield of Texas, which lost $400 million last year on its individual health business, announced yesterday that, going forward, the company won’t be offering its Blue Choice PPO insurance plans for its under 65 block of business. BCBSTX did say that they’ve filed a new product for approval that they believe “will give you a flexible choice for your clients,” though details are not immediately available.

The carrier promised to provide more information as we get closer to open enrollment but also encouraged brokers to go ahead and start talking about the changes with their clients since the company’s “proactive outreach could lead to media attention.”

Here are some details provided the email that BCBSTX sent to its appointed agents:

  • Currently, we have about 367,000 individual Texas members who will have their PPO plan discontinued in 2016. This number fluctuates monthly.
  • Around 148,000 Texas members are in grandfathered PPO plans that will not be discontinued. Our Blue Choice PPO network will continue to serve these members.
  • This change does not affect our product offerings for our employer group customers or Medicare members.
  • Our Blue Advantage® HMO network will remain. We are working to expand the numbers and reach of providers participating in that network.
  • We only had the first full year of ACA claims data for analysis this year, for 2014 claims. In the individual market segment in 2014, BCBSTX paid out more than $400 million more in claims than it collected in premiums. Losses that high are unsustainable, and we have adjusted our offerings – as many insurers have – to be sustainable in the new market reality.
  • Not all hospital systems or large physician networks will be participating in our network options for individual members. While this was true in previous years, the number of providers not in network due to the discontinuance may be greater in 2016. We have ensured that we have an adequate network to provide the physicians and hospitals needed to serve our retail members in each market, and we continue to have discussions with additional providers.

What does this mean for brokers?

Understandably, this news has sent shock waves through the broker community. Insurance advisors are surprised by the news, but they’re also worried about their individual clients and don’t want to be the bearers of bad news. Suddenly, the summer just got much more exciting, and not in a good way.

The news is especially difficult for agents who just dabble in individual health insurance. Maybe their clients were asking for it, maybe they saw an opportunity to bring in some additional income, but either way, these agents now have to take the time and effort to fix this for their customers. Some are probably wondering if it’s even worth it to sell individual plans.

On the other hand, brokers who have set up their own private exchange website through Health Partners America aren’t nearly as worried. In fact, they may see an opportunity to grow their individual business. That’s because your private exchange site comes with the support of a world-class call center with agents licensed in every state. While you generate the leads and direct people to your site, the call center handles the one-on-one sales, and they’re the ones who clean up the mess when something like this happens – you don’t have to make the tough phone calls. As for the opportunity, when 367,000 people learn that their plan will be cancelled, some of them are going to be scrambling for a solution. If you have the technology and support to help them find a good replacement plan, you’re almost certain to pick up some extra benefits. And without having to deal with customers one at a time, you’ll have a lot more time to prospect than other agents who don’t have a private exchange solution.

We’ll finish up with the talking points from the BCBSTX broker letter for those of you who do have individual clients you need to contact. Good luck…

Talking Points for Discussing the Changes with Your Clients

Why is BCBSTX discontinuing the Blue Choice PPO? For the past two years, BCBSTX has been the only health insurer offering an individual PPO plan in all Texas markets. BCBSTX found that the PPO is not sustainable at an affordable price due to anti-selection. BCBSTX will continue to offer other plan options in all 254 counties, on and off the Marketplace.

What will this mean for individual members who currently have the PPO plan? BCBSTX will be transitioning affected individual members to another plan, so you will not experience a gap in coverage. You will also have the option of choosing a different plan during 2016 open enrollment.

Are there providers who were available under the PPO who will no longer be in network for BCBSTX members on any plan? There are some providers who were in BCBSTX’s individual PPO plans networks who will no longer be an in-network option for individual members, except those in grandfathered plans. These providers declined to participate in the Blue Advantage network.

If you are seeing a provider who will no longer be available to you through the new plan’s network, BCBSTX will work with you to find a new provider. If you are currently undergoing a course of treatment, BCBSTX will work with you and your providers to minimize the impact to your care, just as if you changed plans for any other reason.

BCBSTX continually seeks opportunities to work with providers to offer the best solutions for our members.

Will there be a rate increase for HMO for 2016? BCBSTX’s rate filings are currently under review by CMS, so that information won’t be available until rates are finalized and approved. BCBSTX pricing is designed to allow the insurer to offer sustainable products and services to its customers for years to come. A medical loss ratio (MLR) requirement is in place to protect consumers by requiring a high percentage of premiums to go to medical costs. If that requirement is not met, customers may be eligible for a premium rebate.

What would have been the rate increase for PPO for 2016 if it was still available? A plan’s success requires the right ratios of enrollees to providers, and of the amount of premiums paid in to amounts paid out for care provided. In the 2014 individual business, BCBSTX paid out millions more in claims than it collected in premiums. Losses that high are not sustainable. Like any business, BCBSTX must make necessary adjustments. There were no options that kept the PPO sustainable and still allowed for other plans to be offered across the state.

Why couldn’t you just continue offering the PPO and increase the rate for it? Under ACA, individual business is rated using a single risk pool, meaning all individual plans had to be looked at together. This means BCBSTX couldn’t just look at the pricing of the PPO separately. If BCBSTX had kept both the PPO and HMO, it would have added dramatic costs for every member with an individual plan.

Is group subsidizing individual business? The group line of business operates separately from the individual line of business. BCBSTX’s group rates are based on expected cost of doing business for 2016 for group business.

What can I do now? This announcement does not affect your coverage through the end of the year. There is no need to do anything right now.

Shopping for 2016 plans is expected to open Oct. 10, when insurers are allowed to publicly release the full range of plan offerings for the coming year. You will receive a formal notice from BCBSTX by Oct. 1 that will give you the details of your plan changes.

We encourage you to learn more about how an HMO works. BCBSTX has information about HMOs in the “insurance basics” section of their website at bcbstx.com.

If you have more questions now, you can call BCBSTX at the toll-free Customer Service number listed on the back of your ID card.

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