Dive Brief:
- Blue Shield of California, citing losses on its Covered California exchange plans, is slated to close operations for an entire week in September.
- The company will follow the Labor Day holiday by requiring most staff (6,000 employees) to use paid time-off for the four days from September 6-9.
- Blue Shield will save an estimated $4 million by reducing its liabilities for paid time off, the Sacramento Business Journal reported.
Dive Insight:
Blue Shield spokesman Steve Shivinsky told the Journal the company has been experiencing mid-year income challenges due to individual market claims "greatly exceeding" revenue. However, while a number of health plans around the U.S. are facing the same challenges, with some resolving to end or cut back their marketplace participation, Blue Shield of California is not doing that, he said.
It's a different tactic from its competitors who are pulling out of some markets. Blue Cross Blue Shield of Alabama also has remained firm in it's willingness to participate on its state ACA exchange. But it is also proposing to raise individual premium rates on the ACA marketplace on average by 39%.
Shivinsky explained the company is slating its closure for September to avoid the use of extra time off later in the year during open enrollment.
Blue Shield also made a move to save this year by eliminating nearly 400 jobs, and has raised its 2017 rates by almost 20%.
The company is also working to defend its controversially calculated medical loss ratio (MLR) for 2014, which reduced the rebates it owed to customers and recently brought on a class-action lawsuit.