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BlueCross BlueShield of Tennessee Signals Knoxville Return

BlueCross BlueShield of Tennessee is negotiating with state officials about a return to the individual insurance market in 2018 in Knoxville — an area that lacks an insurer for the next year.

The decision is contingent upon the state agreeing to some conditions. The insurer still has reservations about the risk on the individual market but sees expanding into Knoxville as "an extension of our mission," J.D. Hickey, president and CEO of BCBST, wrote in a letter to the insurance commissioner dated May 9.

A 16-county region around Knoxville was left without an insurer for 2018 when Humana pulled out of the individual exchange.

"Again, I want to stress that our openness to this action is in now way a political decision. Nor is it a reflection of our perspective on the stability of individual Marketplace overall. In fact, we cant justify doing so based solely on current political uncertainty, but instead we believe it is an extension of our mission to serve our fellow Tennesseans, especially those who do not have other options for coverage," wrote Hickey.

The negotiations and willingness to sell is a promising sign for next year, said Julie Mix McPeak, insurance commissioner, in an interview with The Tennessean.

BCBST met with the TDCI on May 8, and "that's where the genesis of the decision," started, said McPeak, who called the decision a "late breaking" development.

"They have put some caveats on what might happen in terms of claims experience and the federal action but at this point they are willing to cover Knoxville for 2018," said McPeak. "It’s our first glimmer of hope for that area.”

The individual insurance market in Tennessee has been in a state of upheaval over the last few years as insurers withdrew — including BCBST from three cities — putting the state under a national microscope as lawmakers in Washington debate a health care overhaul.

The insurer indicated that its premiums will be priced to reflect federal uncertainty regarding the future of the exchange.

In fact, the insurer wrote that "we believe it will be necessary to price-in those downside risks, even at the prospect of a higher-than-average margin for the short term, or until stability can be achieved." It cited uncertainty around the future of cost-sharing reductions and the removal of the individual mandate as well as the health insurer tax.

It also wants flexibility on the state's interpretation of the federal regulation that requires an insurer to cover 51 percent of rating areas in the previous year. The regulation and penalty are in place to stop revolving door type exits and returns.

The insurer wrote that its financial performance in 2017 was improved than years prior on better claims and a "more sustainable rate structure based on the medical needs of the members we're serving." The insurer requested, and received, an average premium rate increase for 2017 above 60 percent.

Tennessee has been a focal point for industry observers and lawmakers watching the future of the individual exchange as the Knoxville region was among the first to be without an insurer for 2018.

BCBST said it reserves the option to not sign with the final agreement with the U.S. Department of Health and Human Services in September, which is when it left Knoxville, Memphis and Nashville in 2016.

"There is still that out for them in September. We won’t really be locked in until after September but all indications are that — they are coming out publicly saying that they are interested in covering the area," said McPeak. "They are at risk of backing up now if they make a different decision. I think there would have to be something pretty substantial for them to reverse course.”

Filings regarding the intention to sell for 2018 are due in late June.

Sen. Lamar Alexander, R-Tenn., said the development "welcome news that should give some peace of mind" to the people who were concerned about whether they had options but said it was "a temporary solution."

"If BlueCross BlueShield of Tennessee does ultimately offer plans next year it is only a temporary solution – premiums and copays will be higher and there's no guarantee there will be insurance in the marketplace in 2019, 2020 and beyond,” said Alexander in a statement.

Uncertainty persists about the future structure of the individual market as Senators take up debate on the American Health Care Act, which would change how insurers price plans and the subsidies that lower the cost of premiums for many people.

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