Arkansas Insurers Respond to Shifting Pandemic

Many health insurers have issued rebates to consumers based on provisions of the Affordable Care Act that require a certain percentage of revenue to be devoted to health care. Arkansas Blue Cross Blue Shield, however, expects to meet the required ratio. Still, it has offered 4,100 groups voluntary pandemic relief.

Health and auto insurance claims plunged early in the COVID-19 pandemic as patients skipped doctors’ appointments and drivers stayed parked. But unbent fenders and missed medical visits aren’t one and the same, Max Greenwood of Arkansas Blue Cross & Blue Shield points out.

“If you’re not driving and don’t have a wreck, chances are when you start driving again you’re not going to be in a wreck immediately,” said Greenwood, the Little Rock health insurer’s vice president for government and media affairs.

“When claims are down because people aren’t going to the doctor, the need for that care is penting up. They are going to need that care eventually, and people have been keeping their appointments at more traditional rates recently.”

Claims payments are rising quickly, Greenwood said, and the company anticipates high future costs as COVID-19 survivors need residual care.

Meanwhile, coronavirus is again overwhelming hospitals, setting records in Arkansas and leaving insurers uncertain about the future.

Against that backdrop, state insurance professionals paused last week to review impacts on claims and operations.

Jennifer Bruce of the Arkansas Insurance Department said that a dip in cars on the road generally brings a drop in claims, and that “people working from home in addition to staying home to avoid spreading the virus” play into that equation. She said insurers have postponed customer payments, waived fees and given credits to help in the crisis.

“This is largely viewed as a temporary drop in [auto and health] claims, so a credit is issued instead of a rate decrease,” Bruce told Arkansas Business. “Generally, these rebates were around 15% to 25% off premium payments and equal billions of dollars across the country.”

‘We Weren’t as Locked Down’

Auto insurers offered relief to customers as miles driven and accidents declined in the spring, but dividends and premium refunds weren’t as steep in Arkansas as elsewhere, said State Farm agent Eric Hodson of North Little Rock. “We weren’t as locked down as a lot of other states,” he said. Arkansas policyholders got breaks of about 8% to 10% while drivers in other states reaped 25% and more.

Many health insurers in the state and nationwide provided rebates to insured customers in compliance with limits in the Patient Protection & Affordable Care Act of 2010, but that most likely won’t be the case at Arkansas Blue Cross, the state’s largest privately held company.

In August the insurer offered voluntary premium relief to groups that were up to date with their payments, giving $8.5 million in breaks to 4,100 group plans, Greenwood said.

The Affordable Care Act, now under review by the U.S. Supreme Court, requires rebates to enrollees if health insurers do not spend a certain proportion of revenue on clinical services and improving care. Under a formula known as the medical loss ratio, or MLR, insurers must spend at least 80% or 85% of premiums on medical care, depending on company size, according to the U.S. Centers for Medicare & Medicaid Services.

Greenwood said rebates are required “only if you don’t hit your MLR,” and ABCBS is on track to meet the ratio. “Unless something changes between now and the end of the year, we don’t anticipate having to issue any rebates,” she told Arkansas Business.

ABCBS has about 615,000 fully insured members. QualChoice, the other Little Rock-based health insurer, didn’t respond to interview requests, but health care carriers nationwide have offered grace periods for premium payments, flexible payment options and other relief.

And while overall claims dropped off significantly in the spring, that trend has faded. “Last week, our claims were above where they were prior to the pandemic,” Greenwood said. “So you’re beginning to see people utilizing the health system more traditionally than they had been.”

Surge in Behavioral Health

Blue Cross has also seen a surge in telehealth and mental health visits during the pandemic.

“Like everyone else, at the beginning we saw a very significant drop in person-to-person claims for the fully insured block of business,” Greenwood said. “But we saw a huge increase in telemedicine and particularly in behavioral health. For example, through the end of October, just in our fully insured business, we paid over $25 million in claims, and $13.5 million was for mental health.” She said the current COVID-19 surge could alter the equation further.

Blue Cross took several steps to “make sure that none of our members lost their insurance during this pandemic, and we’ve done that,” Greenwood said. “We have not canceled a single fully insured policy, whether it’s individual or group, for nonpayment of premiums, and we’ve continued paying claims on those policies.”

Blue Cross knew businesses and individuals were under financial stress, and took action, she said. “We temporarily waived member costs and copays for certain telehealth services, and we offered cash advances to not-for-profit hospitals and health systems, because they have limited access to capital,” Greenwood said, noting that Gov. Asa Hutchinson’s pandemic emergency declaration “temporarily halted all elective medical procedures.”

Those advances amounted to $38 million to 19 facilities across the state, she said. ABCBS also sought to shore up its medical providers.

“One of the things we were very, very concerned about was the cash-flow issues that providers were facing,” Greenwood said.

“People weren’t going to the doctor, but the practices still had their overhead. That’s why we expanded our telehealth services for medical care, dentistry, behavioral health, and select therapeutic services with absolutely no cost to the member in most cases.”

Providers received the same fees via telehealth visits, Greenwood said.

Bruce, of the state Insurance Department, said the pandemic required some pivoting from face-to-face insurance transactions to more remote exchanges. This “could mean insurance underwriting, distribution and certain types of sales will increasingly move online in the future,” she said.

A Different Monday Routine

On the auto insurance side, Hodson got the message that claims were down every Monday as spring progressed.

“Even though people can call or file a claim on their State Farm app on the weekends, a lot of times customers prefer to call us and tell us what happened and try to make sure we know about the claim. But for a 10- or 12-week stretch, there’s like none of these calls, when usually we would be getting them from the time we get here till about 11 o’clock,” Hodson said.

In April, State Farm Mutual Automobile Insurance Co., the nation’s largest auto insurer, announced a $2 billion dividend to car insurance customers. “It varied on how long policies were in force, but State Farm, like a lot of companies, saw the need to help customers,” Hodson said.

State Farm Chairman and CEO Michael L. Tipsord, in a statement, called the dividend “one of the ways” the company is helping customers. “We insure more cars than anyone, and we see from our claims activity people are driving less,” he said.

But that wasn’t all, Hodson said. “We turned around and did another billion dollars or more in rate reductions,” he said. “So between dividend and rate reduction, State Farm has committed billions of dollars in relief since COVID hit.”

Miles driven may not be back up to average with many commuters still working at home, but claim activity has returned to the “quote unquote normal level,” Hodson said.

“We had a really mild summer and we’ve had a quite comfortable fall,” leading to an increase in leisure driving, he said. “We’re seeing a lot of parking lot accidents, particularly at Kroger, Walmart, Target and Home Depot.”

It is probably no coincidence, he said. Those stores are magnets to cooped-up consumers riding out a pandemic.