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Empire Blue Cross Blue Shield has agreed to phase out about seven small group products by April 1, 2013, rather than ending them on April 1, 2012, as it originally proposed. Empire reversed course after recent talks with the state Department of Financial Services.
The decision is being greeted with relief by brokers and small businesses. An estimated 20,000 companies, covering as many as 250,000 workers and their family members, use the plans being discontinued by Empire.
“It's the fairer way to do it,” said Matthew Brady, principal of Berry Hill Consulting, a brokerage in Hicksville, N.Y. He has about 75 clients with Empire plans.
If Empire had ended the plans in April, some of the groups might have had to switch midyear to other insurers or plans. That, in turn, might have caused a financial hardship to small businesses and their employees if deductibles had reset to zero.
Winston Himsworth, president of Westbury, Conn.-based Tel/Logic, an administrative consulting firm with about 18 employees that serves the education industry, complained to the state about Empire's move. He was able to quickly shift his coverage to an Oxford plan in November, after Empire announced its plans, but was angry enough to write a letter to the state.
“I'm the kind of person who takes up these causes,” he said.
Empire is cutting its business in the small group market by about two-thirds because the plans had become so unprofitable. In a statement, the insurer said that while it has “both the statutory and contractual right to discontinue on a fixed date, we believe it will be less disruptive to affected members if we discontinue these products on renewal.”
The insurer added that members won't automatically be switched to another plan, but can select an Empire product with comparable benefits or switch to a competitor.
Empire also added two plans to the short list of those that it is keeping. It had said it was continuing PPO 1 and 2, HMO/DHMO Option 12 and Healthy New York; and now has added Blue Essential Option 10 and Total Blue Option 3 to the list.
The decision, reached recently in discussions with the state Department of Financial Services, means about 20,000 small groups will be able to continue with their Empire plans until their renewal dates. “No question that we have gotten many, many calls” from small businesses, said a spokeswoman for the company. “We knew it was going to be hard.”
Elizabeth MacBride is a contributing editor at Crain’s New York Business, a sister publication of Business Insurance.
NEW YORK—Empire Blue Cross Blue Shield notified brokers that it is cutting the number of health insurance plans it offers to small groups as of April 1, and is slashing the compensation it pays to brokers to sell the remaining small group products.