Updated Monday, Aug. 4 at 11:12 a.m. to include Anthem's phone number.
Anthem BlueCross BlueShield of Missouri will return $7.8 million to consumers in the St. Louis area as part of an agreement reached with the Missouri Department of Insurance to settle allegations that the insurer didn’t inform customers that a cheaper, identical plan was available.
The settlement is the largest reached in the Department of Insurance’s history of conducting reviews of insurance policies, according to state officials.
“Part of our mission ... is to ensure that consumers are fully informed about their insurance coverage options when they buy insurance,” John Huff, director of the department, said in a statement. “Missourians should know the department will remain vigilant and utilize all of its regulatory authority when companies fail to do that.”
About 5,500 individuals will receive refunds for premiums previously paid into the more expensive plan. The average check per consumer will be slightly more than $1,000, according to Deb Wiethop, spokeswoman for Anthem.
Anthem denies wrongdoing and any failure to provide information. However, the company says it agreed to settle the dispute to avoid litigation costs.
The Missouri Department of Insurance alleges that Anthem, which does business in Missouri as Healthy Alliance Life Insurance Co. and HMO Missouri Inc., offered two similar health plans to St. Louis area consumers but charged more in premiums for one of those plans. Yet consumers were not made aware of a lower-priced plan, according to the settlement.
The state said that prior to 2007, Anthem had offered two different plans called “Alliance” and “Alliance Choice” that offered different benefits, providers and premiums.
Then, as of Jan. 1, 2007, those plans were converted to new plans, “Blue Access” and “Blue Access Choice,” at which point the state alleges the plans became identical in terms of benefits and “substantially equivalent” in terms of provider networks. However, the premiums charged for the “Blue Access” plan remained higher.
Wiethop, however, said consumers were made aware of the lower-priced option with pamphlets and insurance brokers in 2007. About 90 percent of consumers decided to switch to the lower-priced plan at the time, she said.
Wiethop also disputed the claim that the price should have been the same for both plans. She said the price difference was due to many factors including previous health care provider discounts that were better in some areas, in addition to different health factors, demographics and risk factors among plan members.
Anthem also said the premium differential was “due to, among other things, the historical differential in provider network discounts and different ratings pool,” according to the settlement document.
The plans were marketed in the individual market from 2007 to 2010 in the following counties: the city of St. Louis and St. Louis, St. Charles, Warren, Franklin, Jefferson, St. Francois, Lincoln, Ste. Genevieve and Washington counties, according to the settlement document.
In Missouri, it is illegal to employ any deceptive practices to sell insurance, according to state statute. It’s also illegal to misrepresent the benefits included in insurance policies, according to state statute.
Insurance department officials said settlements such as these could be avoided if Missouri had the ability to review rates and health plans before they could be sold in the state.
This review authority allows regulators to identify problems and proactively prevent consumers from being charged rates that are excessive or discriminatory, according to the department.
“Missouri is the only state in the country where health insurance companies are not required by law to file rates with the state department of insurance,” the department said in a statement.
Anthem is the largest insurer in the state of Missouri with more than $1.8 billion in collected premiums in 2013, according to Missouri Department of Insurance records.
Anthem, based in Indianapolis, is owned by WellPoint.
Consumers with questions about the settlement can call Anthem directly at 1-877-889-1954 or contact the department’s Consumer Affairs Division at 1-800-726-7390.