Blue Cross Charts Path Past Virus, Into Future

Blue Cross Charts Path Past Virus, Into Future
Arkansas Blue Cross & Blue Shield CEO Curtis Barnett says he’s seen a surge in claims in 2021. (Jason Burt)

The COVID-19 pandemic stands as a crucible and a pivot point for Arkansas Blue Cross & Blue Shield as its northwest Arkansas crew settles into a new $40 million, 81,000-SF corporate center.

The Little Rock-based health insurance provider opened the Springdale center earlier this month. The overall organization, among Arkansas’ largest private companies with 3,300 employees and $2.42 billion in revenue in 2020, celebrated the new digs while looking ahead to treating COVID as a long-term endemic disease while continuing a shift toward behavioral health services and away from fee-for-service models.

“These things were in the early stages before COVID, and certainly they’re accelerating today,” Curtis Barnett, president and CEO, told Arkansas Business in a conference room in the provider’s downtown Little Rock headquarters. “I think they’re going to be an important part of care delivery in the future.”

Meanwhile, the company is still dealing with the effects of COVID-19, which jolted the business of health care. While pandemic-related claims mounted, costs for other treatments plunged as medical procedures were canceled and people avoided hospitals and clinics for months. In 2019, the year before the pandemic began, ABCBS paid $1.9 billion in claims. Last year, it paid out $1.8 billion.

The health insurance industry reported only a 7% increase in benefit claims in 2020, even though there were about 33 million COVID-19 cases nationwide, according to the National Association of Insurance Commissioners’ U.S. Health Insurance Industry Report for 2020.

“However, going forward, there is the potential that delayed treatments could lead to worsening health conditions, resulting in escalated claims expenses,” the report said.

ABCBS has seen a surge in claims in 2021 and projects it will pay out about $2.1 billion by the end of the year, Barnett said. It has 332,672 fully insured members. “The area that we are continuing to watch very closely is the volatility in claims payments.”

Barnett doesn’t expect another COVID surge in 2022. “But we do expect for COVID to be endemic instead of pandemic,” Barnett said. The coronavirus’ long-term effects on the health insurance landscape remain unclear. “Some of the new treatments on COVID are beginning to shape up now, and so what are the costs of some of those therapeutics going to be?”

He is expecting overall health care costs to rise about 8% next year. The impact on premium rates will depend on factors such as plan design and product or group experience. But the company will not be charging different rates for vaccinated policyholders and those who haven’t been vaccinated.

The Affordable Care Act and other rules protect unvaccinated individuals from being charged higher premiums, said David Allen of America’s Health Insurance Plans, a national association based in Washington. “This is true for the plans the vast majority of Americans have, including Medicare and Medicaid.”

The ACA does allow for wellness incentives, especially for large groups. “When you look at the cost of vaccines and the cost of vaccination versus the cost of COVID, it is a tremendous investment on behalf of an employer to get as many of their employees vaccinated as possible,” Barnett said. “The rate of return is pretty sizable.”

Tyson Foods Inc. of Springdale is self-insured, and in August it required all its U.S. employees, a total of about 120,000 workers, to be vaccinated.

Tyson doesn’t publicly disclose its health care costs, Kelly Hellbusch, a spokeswoman, said via email.

“The health and safety of our team members is our top priority, which is why we decided to require COVID-19 vaccinations,” Hellbusch said. “We believe that getting vaccinated is the single most effective thing our team members can do to protect themselves, their families, and the communities where we operate.”

During the Pandemic

When the pandemic surfaced in Arkansas in March 2020, ABCBS moved to help policyholders, including dropping the cost of COVID testing. “We wanted people to be comfortable going to get” tests, Barnett said. “We didn’t want there to be any cost prohibitions to that.” It also promoted telehealth, including behavioral health visits.

“We made behavioral health services much more widely available from different types of providers than we had before because we could see the emotional toll that this was taking on our … members,” Barnett said. “We wanted them to be sure that they had access to behavioral health, and we knew telemedicine was the way to get there.”

ABCBS also assisted policyholders and companies with payments or cash flow issues by offering payment plans to keep their coverage. From March 2020 until the end of the year, ABCBS didn’t cancel one customer, either an employer or individual, for failure to pay a premium, Barnett said. “We wanted people to keep their coverage, especially during that critical time and make sure that they got the services that they need,” he said.

And noticing that nonprofit hospitals around the state were having cash flow issues as a result of elective procedures being deferred, ABCBS provided zero-interest loans to them. It provided 19 hospital systems with a total of $38.2 million. Those loans have since been repaid.

“I think it was very helpful to many of them, until the federal stimulus dollars began to flow,” Barnett said. “And so that was something that we did to help out the provider community.” It also awarded $1.7 million to nonprofit organizations that were battling COVID to offset some of the expenses they were incurring fighting the pandemic, he said.

Beyond COVID

COVID ushered in a number of health care initiatives that were already underway. “Telemedicine is a good example,” Barnett said.

One in four Americans has a behavioral health issue and 60% of them don’t receive care in a given year, Barnett said.

More than 80% of ABCBS’ costs go to cover policyholders with chronic conditions such as diabetes, asthma and heart disease.

“Somebody who has a chronic health condition is two times more likely to also have a behavioral health condition as well,” Barnett said.

During the summer, the Blue & You Foundation for a Healthier Arkansas announced $5.29 million in grants for behavioral health programs in Arkansas. The Blue & You Foundation is a charity created and funded by ABCBS to promote better health in Arkansas. The grants support programs that address behavioral health needs from early childhood into adulthood and help to increase the number of behavioral health workers.

ABCBS will also target health disparities in Arkansas. In April, it named Dr. Creshelle Nash to its new position of medical director for health equity and public programs. “Dr. Nash has a passion for ensuring that every person we serve has equal opportunities for equitable care and outcomes,” Barnett said in a news release at the time. “Her deep experience as a public health advocate will be critical as she provides oversight and guidance on key public programs supported by our company.”

Barnett told Arkansas Business that the company’s focus on health disparities will include vaccine coverage and childhood immunizations, where there are some discrepancies based on race, ethnicity and geography.

“And we know there are some pretty significant differences in the way that minority populations seek behavioral health versus others,” Barnett said.

He said Nash will be looking at all of ABCBS’ programs to make sure that everyone has an equal chance to get quality health care.

“And that’s really what health equity seeks to do,” Barnett said.