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Blue Shield Policy Closures Blocked in CA

Margaret Dick Tocknell, for HealthLeaders Media, July 11, 2012

The California Department of Insurance and Blue Shield of California are at odds over the insurer's efforts to close 23 health plans and transfer those members to other products. Blue Shield contends that it is following the law, while the CDI has ruled that it has "disapproved" the block of business closures. That means Blue Shield can't proceed "with the block closures period," a CDI spokesperson told HealthLeaders Media in an e-mail exchange.

 

The potential block closures affect an estimated 250,000 members. At issue, according to a CDI press release is Blue Shield's "notice of intention to close most of its individual market block of business regulated by the CDI on July 2, 2012."

CDI initially disapproved the block closure in March but requested additional information from Blue Shield. The March disapproval was sustained because "the pooling plan submitted to the department does not comply with the requirements" of the state insurance code. The CDI contends that the "size of the remaining open block is inadequate for pooling based on consideration of the accumulative recent and expected future experience of the closed forms and the open block."

In addition, CDI states that inadequate provision was made by Blue Shield for the "more than 20,000 consumers in the Vital Shield 2900 Plan, as they have no transfer right without underwriting."

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