Dive Brief:
- Blue Shield of California has had to repay nearly $25 million to employers and their employees for portions of their 2015 premium payments, California Healthline reports.
- The refunds are due because of the medical loss ratio (MLR) requirement of the ACA, which says that insurers for small businesses and individuals must spend at least 80% of premiums on medical care or related care initiatives, as opposed to administration, marketing, or profits.
- Blue Shield is among six insurers in the state that owed money back from premiums paid in 2015, but it owed by far the most, with the others amounting to no more than several hundred thousand dollars.
Dive Insight:
This is the second consecutive year Blue Shield of California has had to return tens of millions to its customers, and the issue caused the company significant grief the first time around due to allegations that it actually shortchanged its policy holders by $35 million on their rebates for 2014 by improperly calculating its MLR to its own benefit.
While the insurer has staunchly defended its calculation, that lawsuit is still pending. The amount it did pay for 2014 was more than $85 million, the highest rebate total of any insurer in the U.S.
Some other insurers have found themselves owing money as well. Yet the challenge around overcharging customers appears to be especially significant to Blue Shield of California. Their massive, consecutive rebates indicate the company is either just maximizing what they can bring in and then dealing with the adjustment, or that it is having a higher level of difficulty in estimating appropriate premium levels to cover forthcoming healthcare claims, California Healthline noted.
The insurer has faced scrutiny on numerous fronts over the past few years apart from the rebate issue, including its nonprofit status amid "extraordinarily high surpluses" and secrecy around executive pay.