BlueCross’ $1 billion reserve rankles critics

Critics say BlueCross is less interested in providing affordable health insurance than in feathering its nest. The company’s fiscal fitness “just sticks in the craw of the doctors,” said Russ Miller, senior vice president of the Tennessee Medical Association, which represents 6,800 physicians.

This spring, the group lost a lawsuit against BlueCross that accused it of “numerous unfair and deceptive acts” intended to deny, defer or decrease payments to doctors.

“You have patients who are paying ever-increasing premiums, doctors who are getting less money (for seeing these patients) and a medical delivery system that’s a mess, but the insurance company is doing really good,” Miller said.

BlueCross president and CEO Vicky Gregg says the company is doing what’s best for customers.

“We try to make sure we invest in things that would be beneficial to the people we’re trying to serve and would make the company better able to meet their needs going into the future,” Gregg said.

BlueCross BlueShield of Tennessee is the state’s largest health insurance company, covering nearly half the state’s 5.9 million people.

As a not-for-profit, any earnings return to the company rather than being divided among shareholders. Unlike a nonprofit group, BlueCross pays state and federal taxes — $142.3 million in fiscal 2004.

The company belongs to the Blue Cross and Blue Shield family of insurance companies that, as a group, cover some 92 million lives, or nearly one-third of all Americans, but it is independently owned and operated.

The Tennessee company has used some of its money in recent months to buy or build for-profit businesses it says should help lessen the need for large rate increases. It also plans to spend $200 million on a new headquarters in Chattanooga. Currently, its Chattanooga operations are spread among 10 buildings across the city.

Gregg said the ventures are intended to make the company more efficient — and more self-sufficient — which will help it provide Tennesseans with affordable health insurance.

But the company’s healthy surplus concerns state Rep. Rob Briley, D-Nashville, who sponsored several bills during the 2003 legislature that would have changed how BlueCross is allowed to operate.

Given BlueCross’ substantially more money in reserves than is legally required, “there’s a serious question about whether they should return that to their members in terms of rate reductions or increased reimbursement rates to providers,” he said.

Two years ago, Briley and then state Sen. Bill Clabough, R-Maryville, introduced bills that would have changed how BlueCross is governed and limited its financial reserves.

The bills were introduced at the urging of HCA Inc., the Nashville-based hospital company that was embroiled in a contract dispute with the insurer at the time. They were tabled after HCA reached an agreement with BlueCross.