Blue Cross and Blue Shield of Alabama

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Blue Cross and Blue Shield of Alabama
Type Non-Profit, Private company
Industry Insurance
Founded 1936
Headquarters Birmingham, Alabama, USA
Key people Terry Kellogg, President and Chief Executive Officer
Cindi Vice, Chief Financial Officer
Tim Sexton, Chief Marketing Officer
Tim Kirkpatrick, Executive Vice President
Products Health Insurance
Revenue Increase$4.27 billion USD (2010)
Employees 3,700 (2010)
Website http://www.bcbsal.com/

Blue Cross and Blue Shield of Alabama is a health insurance company headquartered in Birmingham, Alabama. The company was founded in 1936, provides coverage to more than 3 million people and is a member of the Blue Cross and Blue Shield Association. Blue Cross and Blue Shield of Alabama employs nearly 3,700 people, which includes almost 3,000 people at its corporate headquarters in Birmingham. The company also operates Cahaba Government Benefit Administrators and Cahaba Safeguard Administrators, both headquartered in Birmingham.

Organization[edit]

BCBS of Alabama is classified as a 501(m) company by the IRS. Under state law it is classified as a "special health-benefit service plan", not an insurance company, although its coverage functions like health insurance. As special health-benefit service plan the Alabama Department of Insurance does not automatically review BCBS rates.[1]

BCBS owns Alabama Industries Financial Corporation, which owns United Trust Insurance Company. BCBS owns Preferred Care Services, which owns PCS LLC. BCBS also owns Prime Therapeutics,LLC and the Caring Foundation.(see BCBS organizational chart[2]:17

United Trust Insurance Company[edit]

In 1986 BCBS had acquired a life insurance company named Modern American Life Insurance Company, incorporated in 1964. A lawsuit forced BCBS to change life insurance coverage to disability coverage, and the company was renamed to United Trust Insurance Company in 1988. Over the years it came to assume risk associated with BCBS long term care policies, and sold short term disabilty coverage. By the end of 2012 the company held US$1 million of capital stock and a surplus of US$986 million.[2]:8 As of 2012 United Trust Insurance Company had agreements with multiple other insurance companies like Able Benefit Solutions, BCS (Bishop, Cannon and Stacy) Insurance Company, Companion Life Insurance Company/Medical risk Managers Inc, Glencairn Health and Specialty. It was tasked with marketing stop and excess-loss reinsurance products. It was deemed a 18 U.S.C.§ 1033 insurer, but 1033 did not apply, because it had no employees.[2]:17

Cahaba Government Benefit Administrators, LLC[edit]

Cahaba Government Benefit Administrators (GBA), headquartered in Birmingham, has been a financial intermediary with the Centers for Medicare & Medicaid Services (CMS) administering Alabama Medicare fee-for-service claims. Prior to Medicare contracting reform in 2005, CMS awarded Cahaba a no bid contract.[3]. :2 In January 2009, Cahaba won a US$ 335 million 5-year contract with the CMS to administer Medicare insurance in 3 more states besides Alabama, in Georgia,Tennessee and in Mississippi for part B Medicare.[3]/:2 The contract's full name is 'Jurisdiction 10 (J10) A/B Medicare Administrative Contract'. Cahaba also provides Regional Home Health Intermediary coverage for numerous states across the country.

Cahaba Safeguard Administrators, LLC[edit]

Cahaba Safeguard Administrators, headquartered in Birmingham, was founded in 2002 to administer Medicare fraud prevention and is one of 12 contractors under the Centers for Medicare & Medicaid Services.

Leadership compensation[edit]

CEO Terry D. Kellogg's total compensation for 2013 was $4.84 million, including a salary of $999,959, bonuses of $3,580,651 and other compensation of $257,227. Compensation in 2013 was a 95.5 percent raise since 2011.[4]

History[edit]

Blue Cross and Blue Shield of Alabama was founded in 1936 as the Hospital Service Corporation. In 1952, the company changed its name to Blue Cross-Blue Shield of Alabama. In 1970, the name was changed back to Blue Cross and Blue Shield of Alabama (BCBS). By that year, it had increased its enrollment to over 1 million people. By 1994, the company increased enrollment to 2 million people and by 2001 it increased to 3 million.

At the end of 2011, BCBS assets totalled $2.4 billion, according to Alabama Department of Insurance records.[1] It had a revenue of $4.1 billion, and a net income of $257 million in 2011, a 58 percent gain from 2010.[1] As of 2012 BCBS had amassed a surplus of $991 million, which the insurance industry calls "unassigned funds". In 2011, BCBS had a market share of 90 percent.[1]

Law suits[edit]

In 1998, Sanderson et al vs. Blue Cross and Blue Shield of Alabama was resolved by BCBS having to establish new capital benchmark guidelines for its "unassigned funds" and to adjust benefit rates by US$208 million minus legal fees over 3 years ("prospective rate adjustment program").[5]

BCBS was sued seven times in 2012 on anti-trust grounds for conspiring with others to avoid competition in U.S. District Court in Birmingham.[1]

References[edit]

  1. ^ a b c d e Russell Hubbard (5 August 2012). "Blue Cross Blue Shield's $2.8 billion in assets draws criticism". The Birmingham News (Alabama Media Group). 
  2. ^ a b c Mary B Packard, CPA (31 December 2012). "Report of Examination of United Trust Insurance Company". Alabama Department of Insurance. Retrieved 15 December 2014. 
  3. ^ a b CMS.gov (22 September 2014). "Jurisdiction 10 Fact Sheet". Centers for Medicare & Medicaid Services. Retrieved 15 December 2014. 
  4. ^ Mike Oliver (15 August 2014). "Top 10 execs at Alabama's Blue Cross doubled their pay in last two years". Birmingham News (Alabama Media Group). Retrieved 15 December 2014. 
  5. ^ BCBS (19 January 2004). "BlueCross Actuaria Report and PRAP-". Examination Reports. AL Department of Insurance. Retrieved 15 December 2014. 

External links[edit]