Regence BlueShield Decides to Leave Washington’s Medicaid Market

January 5, 2012 – Regence BlueShield is pulling out of the Medicaid market in Washington, after deciding not to bid on a new contract that takes effect in July.

Since 2002, Regence has been covering pregnant women, children and people who qualify for temporary assistance in seven counties in Western Washington under a program known as Healthy Options. Currently, it covers approximately 38,000 people.

In the late 1990s, Regence BlueCross BlueShield withdrew from the Oregon Health Plan, saying it was no longer financial viable to participate.

Regence’s decision in Washington came as “the biggest surprise among health plan folks,” according to DJ Wilson who produces a blog called www.stateofreform.com, saying “They’ve had a long involvement in managed care models, going back to the RegenceCare model from a decade ago, and clearly they are in the market now.”

Offering an explanation, Regence officials released a statement to the Washington Health Care Authority, saying “We have determined that it is in the best interest of our collective membership to not submit a bid at this time.”

When asked for clarification, Georganne Benjamin, strategic communications officer for Cambia Health Solutions, the holding company for the Regence plans, refused to comment, telling The Lund Report, “Regence does not have any comments for your story regarding our decision.”

Regence’s decision came after the Health Care Authority announced new bid proposals for 2012. That contract is expected to save money for the state by leveraging its purchasing power and consolidating the Healthy Options program with the Basic Health Plan, which provides coverage for the working poor including foster children and Social Security Income recipients.

Under the new contracts, the number of people covered by managed care will increase to 737,000 lives (the current program covers approximately 700,000 people).

The Authority expects to announce the successful bidders by January 17 and finalize contracts by the end of February, with the new contract running for 18 months (July 2012 through December 2013), according to Jim Stevenson, spokesperson.

Group Health Cooperative and Kaiser Foundation Health Plan also decided not to bid on the contract and, together, have a much smaller proportion of Medicaid members than Regence BlueShield.

Group Health had approximately 21,000 members, while Kaiser’s membership stood at 1,120 as of December 2011. Neither health plan submitted comments about their decision to leave the Healthy Options program.

“In order to maintain a level and fair field of competition, we do not make inquiries of non-responding vendors -- especially when we have received responses from other qualified bidders,” according to Stevenson.   

Under the new contracts, insurers cannot cap their Medicaid enrollments, which, according to Wilson, would have impacted their physician panels and, with the coming expansion of Medicaid, “would have meant financial ruin for the cooperative.” Both Group Health Cooperative and Kaiser, he said, expect to contract their physician panels with other insurers.

Regence’s Complaint Record

In other news about Regence BlueShield, in 2010 it had the highest number of complaints among health insurers, according to a report released by the Washington Insurance Commissioner. There were 249 complaints, which reflected 25.12% of the market and represented $2 billion in premium dollars.

Premera BlueCross, on the other hand, came in second in the number of complaints filed – 103 complaints – and 21.87% of Washington’s market and the company had $1.7 billion in  premium dollars that same year. More information can be found at www.insurance.wa.gov.
 

FOR MORE INFORMATION

To read about Kaiser being on pace to take the membership mantle away from Regence, click here. To read about Regence BlueCross BlueShield’s decision to seek a 4.5% rate increase, click here. To read about Washington’s Insurance Commissioner launching a market conduct study into Regence plans in Washington, click here.

To read about the $100,000 fine imposed by CMS and find the board members of The Regence Group, click here. To read about how regulators didn’t question the $56.5 million payout by Regence BlueCross BlueShield, click here. To read about the leadership shake-up at Regence click here. To read about the investigation of Regence by Washington’s insurance commissioner, click here. To read about Regence BlueCross BlueShield’s losing its status as the leading insurer in Oregon, click here.