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COVID-19’s Impacts on Health Care Finances Are Coming into Focus

By Mitch Perry | March 2, 2021 | 5 min read | Thought Leadership, Industry Perspectives

As we’re approaching the one-year mark since North Carolina started to feel the impact of the pandemic, we now have a good understanding of how the pandemic is financially affecting our Company.

  • Between lowering our premiums for 2020 and absorbing the incremental costs associated with COVID-19, we saw a decrease in our company’s net income, down from $492 million in 2019 to $261 million last year.
  • Our net income ratio fell by nearly half, from 5 percent in 2019 to 2.6 percent in 2020.
  • Even while membership grew slightly in 2020, revenue remained steady at $9.9 billion. This is a reflection of our strong work in continuing to drive for affordability for our customers.
  • Due to the pandemic, claims and medical expenses were the big financial story as our medical expenses increased by $200 million to hit a record high of $7.5 billion last year. In fact, December 2020 was the highest single month of health care costs in the history of our company.
  • It is likely that claims volatility may continue beyond the first quarter of this year.

Our COVID-19 response included $800 million in relief to customers, community organizations and employees in 2020.  Over the past year, our response to COVID-19 concentrated on three fronts:

  1. Getting our customers the care they needed and helping employees continue to serve them
  2. Helping providers weather the financial storm
  3. Staying focused on making health care better for all

Putting Our Customers First

From the start of the pandemic, our goal was to make sure our customers had safe and convenient access to health care and that cost wasn’t an obstacle for them.

  • We were one of the first insurers to adopt policies to cover COVID-19 testing and treatment with no out-of-pocket cost to customers.
  • Our decision to lower 2021 premiums for our Individual Under-65 customers –, marking the third consecutive year of reduced premiums – brought some relief at a time when many families were facing job losses and strained finances. Over three years, our lower premiums have saved our Individual Under-65 customers about $1 billion.
  • We also lowered customers’ costs for 90-day prescription supplies from both retail and mail-order pharmacies, making it easier – both logistically and financially –to get the medications they need.
  • Part of that relief came in September, as the pandemic and social distancing became long-term prospects, when Blue Cross NC announced the distribution of $200 million in health and wellness retail cards to more than 600,000 eligible subscribers across the state. Eligible subscribers received a retail card worth between $100 and $500 to use for over-the-counter medications, food, first aid supplies, baby care items, exercise equipment, vitamins and other needs. We funded this with proceeds received in 2020 from our successful ACA risk corridor lawsuit. We also used a portion of these funds to reduce 2021 premium rates.

Another speedy response from our company was to expand coverage of telehealth consultations so patients could remain in the safety of their homes while still getting the health care they needed.

  • In addition to covering video consultations, telephone visits were added as a benefit.
  • Blue Cross NC has been covering telehealth claims since 1997 and since that time, we have consistently supported virtual medicine. For many patients and providers, COVID-19 presented the first opportunity to try telehealth and its potential for improving access to care is now proven. We saw an increase of 7,500 percent in telehealth claims in 2020, translating to about $76 million spent on virtual health care last year.
  • For our Medicare Advantage members, we waived all copays for in-network primary care and outpatient behavioral health visits, including telehealth consultations.

Supporting Our Network of Providers

  • For providers, we streamlined the claims process to speed reimbursements, waived prior authorization for acute inpatient COVID-19 hospitalizations and launched a web portal for providers to stay updated on the company’s response to the pandemic.
  • In response, Blue Cross NC launched Accelerate to Value with the goal of helping independent primary care practices remain in business as the early months of the pandemic saw a sharp decrease in demand for non-urgent care. Accelerate to Value provided financial support by paying nearly $20 million to 513 participating practices at pre-pandemic 2019 levels, while making the practices eligible for fixed monthly payments starting in 2022 to meet the health needs of their entire patient population.
  • Accelerate to Value also allowed participating practices the chance to join our Blue Premier value-based care program. Practices in Accelerate to Value became part of an accountable care organization that rewards providers for meeting goals for health outcomes and cost efficiencies.

Making Health Care Better, Simpler, More Affordable

  • With many North Carolinians facing financial hardship and dealing with social isolation in 2020, behavioral and mental health were more important than ever. Early last year, we announced a collaboration with Quartet Health to bring the Blue Premier model to behavioral and mental health, further integrating with physical health.
  • To expand access to affordable health care, we unveiled a series of investments aimed at addressing the unique challenges in the rural areas of our state. This initiative supported nonprofits and colleges addressing the opioid epidemic, housing issues, emergency response, interpersonal violence and other pressing issues affecting community health.

Putting People First

Putting people first is one of our core company values. A review of our COVID-19 response must also include our support for Blue Cross NC employees. Our Chief People Officer Fara Palumbo has written a great deal in the past year about how early in the pandemic, we put our employees’ health and well-being first, successfully and seamlessly transitioning virtually all of our work force from our Blue Cross NC campuses  to remote locations.  We also adapted our health and wellness benefits, kept parental duties top of mind, deployed needed equipment and tools, and more.

Blue Cross NC’s financial strength put our company in position to respond with immediate support for our customers, our provider partners and employees through COVID-19 and beyond.  We are not past the COVID-19 era yet. While we are optimistic about recent trends, we understand that there are likely more challenges to come.  And I am confident that we are ready to address them on behalf of our customers and the broader health care community, just as we did in 2020.