Blue Cross and Blue Shield N.C. and Wake Forest Baptist Medical Center have agreed to create a special Affordable Care Act product in the Triad that could reduce 2020 individual rates by up to 40%.
The rate decreases, announced Wednesday, would be made available through a program known as Blue Local.
Blue Cross NC insures more than 70,000 individual ACA customers in Davidson, Davie, Forsyth, Guilford, Randolph, Stokes, Wilkes and Yadkin counties.
Individual premiums will be available in October. Rates for Blue Local will be available by Nov. 1, the first day of the open-enrollment period that ends Dec. 15.
Blue Cross announced Wednesday a similar plan partnership, known as Blue Home, with UNC Health Care to reduce individual ACA rates in the Triangle by an average 4.5%.
According to the insurer, current Blue Value plan participants in the Triad are projected to save, on average, $1,330 a year before subsidies. Blue Advantage plan participants are projected to save, on average, $3,400 a year before subsidies.
The insurer cautioned premium rates vary based on location, age, subsidy amount and plan chosen.
“We are thrilled to have reached an agreement with Wake Forest Baptist Health that will provide our customers with access to a high-quality, more affordable health plan,” Patrick Conway, president and chief executive of Blue Cross NC, said in a statement.
“While we have a lot of work left to do, we’re going to keep building on successes like these, and become a national model for what better, simpler, more affordable health care looks like.”
Dr. Kevin High, president of Wake Forest Baptist Health, said the partnership will “offer a cost savings to the ACA members in our region.”
Blue Cross NC said it will continue selling Blue Advantage and Blue Value products in the eight counties.
The insurer cautioned that “due to the way the federal government calculates subsidies, members who choose to stay with Blue Advantage or Blue Value will see a subsidy decrease because of the lower-cost Blue Local product.”
The partnership comes about three weeks after Blue Cross announced plans July 31 to reduce premium rates for the second consecutive year for individuals signing up for 2020 coverage on the federal health-insurance exchange.
The insurer is requesting permission from the N.C. Insurance Department to lower ACA premium rates by an average 5.2%. That’s on top of reducing rates by 4.1% in 2019.
For small businesses with one to 50 employees, Blue Cross is proposing an average rate decrease of 3.3% for their ACA plans.
By comparison, state insurance officials approved in October 2017 a 14.15% premium increase for 2018. The insurer initially asked for a 22.9% increase.
Blue Cross said it will make more detailed rate information public after Insurance Department approval of all of its ACA rates, which is expected by Aug. 31.
Blue Cross estimates it will cover more than 505,000 North Carolinians with exchange plans next year, counting people in every county. Individual premiums will be available in October.
Blue Cross said the decreases were made possible primarily by its transition to value-based provider reimbursement and progress on reducing internal operating expenses. The combined rate decreases represent a $238 million reduction in health care costs for 2020.
“This new offering (Blue Local) takes advantage of Wake Forest Baptist’s expertise and progress in providing value-based care to patients for the past five years,” the groups said Wednesday.
In January, the insurer launched Blue Premier in collaboration with five major health systems — Wake Forest Baptist, Cone Health, Duke University Health, UNC Hospitals and WakeMed.
Conway said that ”historically, our health-care system pays for services that may or may not improve a patient’s health, and our customers simply cannot afford this approach.”
With the existing “fee-for-service” system, patients or insurers pay providers for each office visit or treatment, creating additional revenue for repeat visits or hospital re-admissions.
The newer approach — called “value-based” contracting — typically offers providers incentives for better patient outcomes through emphasizing preventive and maintenance care, which tends to be less costly than treating patients after they have become sick.
The insurer said it has benefited from “gaining substantial insights about its ACA customers over the six years it has participated in the marketplace.”
“This information has allowed the company to better coordinate care for these customers and reduce the medical expenses for the care they require.”
Mitch Kokai, senior policy analyst with Libertarian think tank John Locke Foundation, said “it’s noteworthy that Blue Cross suggests a key factor in the proposed rate decrease is government policymakers’ decision not to add additional health insurance mandates and regulatory burdens.
“Blue Cross draws attention to the fact that these types of state government action tend to drive up costs and contribute to uncertainty about future policy changes.”