CHATTANOOGA, Tenn. — BlueCross BlueShield of Tennessee will issue $8.6 million in rebates to approximately 73,000 individual policyholders on Aug. 1, 2012. The insurer’s medical loss ratio (MLR) was 76.6 percent, just short of the required 80 percent established by the health care reform law.

The company met the minimum MLR for small and large group accounts, so it will not issue rebates to these business segments.

“Our goal is to meet the MLR requirements by committing ourselves to efforts that rein in costs and make our members healthier,” said Calvin Anderson, senior vice president and chief of staff for BlueCross. “To achieve this, we’re putting an emphasis on healthy lifestyles and preventive care, as well as other important initiatives that focus on affordable, safe and high-quality health care for all Tennesseans.”

The $8.6 million rebate covers 2011 and reflects a small percentage of the individual policy premiums collected that year by BlueCross, which insures more individuals in Tennessee than any of its competitors. In total, the refund equals less than 3.4 percent of premiums paid.

Exact amounts to be paid to individual policyholders will differ based on the amount of premium each paid, which varies based on several factors including months they were covered in 2011. Approximately 84 percent of subscribers will receive amounts less than $200.

According to Chris Ramsey, director of BlueCross’ office of health care reform, it’s impossible to predict with absolute certainty what the rate of medical use by members will be in advance.

“Even though numerous factors can impact the volume of medical services used by our members, we work to get as close as we can with our projections. We are usually within a few percentage points on the projections, as we were with these individual policies,” Ramsey explained.

The health care reform law sets minimum requirements for how much insurance companies are required to spend on health care services and activities to improve health quality. MLR is calculated by totaling the amount spent on medical claims and quality improvement, and then dividing by the amount of premiums paid after subtracting allowable taxes and fees.

The minimum MLR is 80 percent for the individual and the small group market segments and 85 percent for the large group market segment. BlueCross’ MLR for the 2011 reporting year was 80.1 percent for small group and 87.7 percent for large group.

The portion of the premium that is not used to pay for medical services or quality improvements is used for profit, reserves and administrative expenses such as provider contracting, fraud prevention, broker commissions, and paying claims and systems that support claim payment. In 2011, 3 percent of the company’s premium dollar for insured lines of business went toward the company’s profit margin.

Rebate checks for qualifying individuals will be mailed by Aug. 1, 2012. For more information on MLR, visit

About BlueCross

BlueCross BlueShield of Tennessee's mission is to provide its customers and communities with peace of mind through affordable solutions for health and healing, life and living. Founded in 1945, the Chattanooga-based company is focused on reinventing the health plan for its 3 million members in Tennessee and across the country. Through its integrated health management approach, BlueCross provides patient-centric products and services that drive health improvement and positively impact health care quality and value. BlueCross BlueShield of Tennessee Inc. is an independent licensee of the BlueCross BlueShield Association. For more information, visit the company's website at