Blue Shield of California

Blue Shield of California is a health plan provider founded in 1939.[3] It is based in Oakland, California and serves over 4 million health plan members and nearly 65,000 physicians across the state.[5] Blue Shield of California was founded by the California Medical Association. Founded as a not-for-profit, Blue Shield of California was stripped of its tax-exempt status by the California Franchise Tax Board in 2014.[2]

Blue Shield of California
TypeNon-Profit Health Plan (tax exempt status removed in 2014)[1][2]
IndustryHealthcare
Founded1938 (created)[3]
1939 (incorporated)[3]
FounderCalifornia Medical Association[3]
Headquarters601 12th Street
Oakland, California
Key people
Paul Markovich,
President and chief executive
Revenue $20.6 billion USD (2018)[4]
$413 million USD (2018)[4]
Members 4.3 million (June 2019) [4]
Number of employees
6,808 (2018)
Websiteblueshieldca.com

History

Blue Shield of California, then known as California Physicians' Service, was created by the California Medical Association on December 18, 1938,[6] and was incorporated on August 9, 1939. The organization began offering coverage on March 6 of that same year. In 1946, the organization was among a founder of the National Association of Blue Shield Plans, which later became the Blue Cross and Blue Shield Association. Today, Blue Shield of California is an independent licensee of the national association. The Blue Shield of California health plan was the first in the nation to offer catastrophic coverage in 1950, provide coverage for a heart transplant in 1984, offer online benefit and enrollment information in 1996, and offer an online enrollment system for agents in 1998. In 2006, the National Committee for Quality Assurance, commonly referred to as NCQA, recently recognized Blue Shield as an "excellent" health plan for service and clinical quality.

The Blue Cross of California, which traditionally covered the hospital portion of insurance, was a separate entity which went public in 1992 under the name Wellpoint, with the name later changing to Anthem.[7]

In 2010, Blue Shield of California, Dignity Health, and Hill Physicians Medical Group formed an Accountable Care Organization that covers 41,000 individuals in the California Public Employees Retirement System (CalPERS). During its first 2 years, this program reduced inpatient use and health care costs significantly.[8]

In 2014, Blue Shield of California lost its exemption from California state corporate income tax but did not officially announce this information to the public until March 2015.[2] A claimed recent application of the duck test was the denial of tax-exempt "nonprofit" status to Blue Shield of California.[9]

In 2015, Blue Shield entered the Medicaid market by acquiring Care1st Health Plan.[10] Blue Shield sold Care1st Arizona to WellCare in 2017. Care1st California was renamed Blue Shield of California Promise Health Plan in 2019.[11]

Network

Blue Shield of California's provider network currently includes 58,000 physicians and more than 340 hospitals statewide.[12]

Blue Shield established 42 accountable care organization (ACO) partnerships across the state. Since 2010, Blue Shield's ACO program has:

  • Cut the number of days patients stay in the hospital by 16%
  • Reduced hospital re-admissions by 13%
  • Reduced their patient care expenditure by $480 million

Other examples of Blue Shield's efforts to transform health care include:

  • Investing $30 million in a multi-year collaboration with the California Medical Association to develop and support a new health care model that will bring health care into the digital age, tie pay to value and create a patient-centered experience through home- and community-based services.
  • Collaborating with Manifest MedEx, one of the nation's largest nonprofit health information exchanges, to advance secure health information sharing between providers, plans and ultimately consumers.
  • Providing home-based palliative care and 24/7 support to select members with serious illness in all 58 counties in California - the only health plan in the state to offer this service.
  • Offering 24/7 house calls for chronically ill patients who have at least 6 of 13 debilitating illnesses, through a collaboration with Landmark, which delivers home-based medical and behavioral care and social support services.

Financial

2% Pledge: Blue Shield voluntarily caps its net income at 2% of revenue, with approval from the board of directors. More than $596 million has been returned to customers and the community a result of the pledge.[13]

Financial Performance:[14]

  • $20.6 Billion in revenue in 2018
  • $413 Million net income in 2018
  • A+ rating from Fitch Ratings for Blue Shield of California
  • A (excellent) rating from AM Best for California Physicians' Service
  • A+ (excellent) rating by Weiss Ratings for California Physicians' Service

In 2015, Blue Shield of California was stripped of its state tax exempt status following "a lengthy state audit that looked at the justification for Blue Shield's taxpayer subsidy." Such a finding indicates that the organization failed to act for the public good as required for exempt status. The organization holds billions in cash reserves, spends millions in executive pay, and provides no services for Medi-Cal recipients. The organization defends its non-profit status, but has failed to provide sufficient evidence that its actions align with such obligations.[15]

Quality of care

In the California Healthcare Quality Report Card 2009 Edition, Blue Shield of California received 3 out of 4 stars in Meeting National Standards of Care and 2 out of 4 stars in How Members Rate Their HMO.[16]

Controversy

In 2006, Blue Shield agreed to a $6.5 million settlement relating to allegedly modifying the risk tier structure of its individual and family health care plans. In 2008, the organization settled for $3 million with the California Department of Managed Health Care to resolve allegations of improper rescission of individual health plan coverage. Further, the organization reinstated coverage to 450 members whose plans had been cancelled and agreed to provide compensation for any medical debts incurred by these policyholders due to the rescission.[17]

References
  1. "Mission and Values - Blue Shield of California". blueshieldca.com. Retrieved 2016-03-17.
  2. "With billions in the bank, Blue Shield of California loses its state tax-exempt status". Los Angeles Times. Retrieved 2016-09-01.
  3. "Corporate History and Timeline - Blue Shield of California". blueshieldca.com. Retrieved 2016-03-17.
  4. "Financials - Blue Shield of California". blueshieldca.com/about/corporate-info/financial.
  5. "Company Facts and Network Statistics - Blue Shield of California". blueshieldca.com. 28 January 2016.
  6. "Corporate History and Timeline - Blue Shield of California". blueshieldca.com. 12 September 2011.
  7. "Don't call us WellPoint, says newly named Anthem". Indianapolis Star. Retrieved 2019-05-24.
  8. "Accountable Care Organization Featuring Shared Global Risk Stimulates Development of Initiatives To Improve Care, Reduces Inpatient Use and Costs". Agency for Healthcare Research and Quality. 2013-05-08. Retrieved 2013-05-09.
  9. Seipel, Tracy (March 19, 2015). "California drops hammer on Blue Shield tax-exempt status". San Jose Mercury News. Retrieved March 19, 2015.
  10. "Blue Shield of California Closes on Acquisition of Care1st, Enters Medi-Cal/Medicaid". Blue Shield.
  11. "Care1st Health Plan Changing Its Name". L.A. Care Health Plan. 2018-12-13. Retrieved 2019-06-21.
  12. "Fact Sheet". Blue Shield of California - News Center.
  13. Blue Shield of California - Fast Facts
  14. "Blue Shield of California - Fast Facts". Blue Shield California. Retrieved 4 August 2020.
  15. Terhune, Chad. "With billions in the bank, Blue Shield of California loses its state tax-exempt status". Los Angeles Times.
  16. State of California - Health Care Quality Report Card 2009 Edition Archived July 19, 2011, at the Wayback Machine
  17. "2 health insurers to pay $13M to Calif. regulators". AP/Google. 2008-07-18. Archived from the original on 2008-07-21. Retrieved 2008-07-18.
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