Rhode Island's health insurance commissioner Chris Koller ordered Blue Cross and Blue Shield of Rhode Island to lower its direct pay rates by 1.1 percent in late February, a move that would affect about 14,000 Rhode Islanders. The commissioner issued his decision after deliberating on an earlier request by Blue Cross for a 2.4 percent rate increase, according to the official press release.
Direct pay rates affect customers who purchase their own health insurance. The rate change is an average across customer payments, since Blue Cross offers plans with higher patient cost-sharing.
"They weren't asking for profits," Koller said, adding that Blue Cross' original request for a rate increase was based on concerns about the economy. "Blue Cross put up some of their own numbers. I think we found that they were a little conservative in some of their medical expenses," he said.
The commission's evaluation found that the company's costs will probably not increase much over the coming year and may actually decrease, he said.
The Office of the Attorney General noted financial inefficiencies in the Blue Cross administration department, according to a commission press release. Despite the reduction, Blue Cross will not sustain significant losses.
"In our estimation, the rates that we came up with are what Blue Cross needs to maintain an adequate profit," Koller said. "So I think the effect on Blue Cross financially should be relatively minimal."
Blue Cross originally requested a 4.4 percent increase but voluntarily lowered it by two percentage points after negotiating a new pharmaceutical contract, according to a press release.
"(Blue Cross) shares the Office of the Health Insurance Commissioner's concern for the vulnerability of the direct pay population, and we continue to look for ways to help moderate the cost of care without compromising quality," wrote Kim Reingold, press contact for Blue Cross, in an email to The Herald. Blue Cross has decreased its administrative and overhead costs by over $30 million in recent years without affecting services, Reingold wrote.
Customers of the direct payment plan will have to be careful when deciding on new coverage options, Koller said. Since patients share the costs of Blue Cross plans, the rate decrease could raise co-payments of future Blue Cross plans. While some will benefit, others may see rate increases.
"It's important for customers to know that the products in general will involve a lot more cost-sharing, and they should be choosing very carefully," Koller said.
Blue Cross will not appeal the decision in superior court, Reingold said.