Healthcare Providers Keep Singing the Blues About Unfair Reimbursement Rates But Blue Cross Blue Shield Won’t Change Its Tune

After more than a decade of litigation and more than $5 billion in settlements, the Blue Cross Blue Shield Association (“BCBSA”) and its affiliate insurance companies (the “BCBS Entities”) appear to be up to their old tricks. Boston Children’s Hospital and over 20 affiliated entities filed a sweeping antitrust lawsuit on June 16, 2025, in the U.S. District Court for the District of Massachusetts — Boston Children’s Hospital, et al. v. Blue Cross Blue Shield Association, et al., Case No. 1:25-cv-11757. The defendants named in the lawsuit include BCBSA and over 30 BCBS Entities operating across the U.S., such as BCBS of Massachusetts, Anthem, CareFirst, Highmark, and others. The plaintiffs allege a long-running conspiracy by the BCBS Entities and their parent, BCBSA, to suppress competition and underpay Boston Children’s Hospital and its affiliates for healthcare services.

According to the lawsuit, BBCBSA’s and the BCBS Entities’ alleged anticompetitive conduct spans from July 24, 2008, to the present, and involves their market allocation through Exclusive Service Areas (“ESAs”), license agreements and national accounts program, price fixing through their BlueCard Program, and a boycott conspiracy by the Blue Cross Blue Shield defendants. The plaintiffs allege this conduct violates the federal Sherman Act and the Massachusetts Consumer Protection Act. Blue Cross Blue Shield uses its dominant position, they allege, to force healthcare providers into accepting lower rates, with no competitive alternatives. The plaintiffs claim they have been under-reimbursed by billions of dollars for services provided to Blue Cross Blue Shield members, and that the BlueCard system imposes complex, inefficient billing and appeals processes that further increase healthcare provider costs and limit their abilities to recoup full reimbursement for their services. To remedy Blue Cross Blue Shield’s wrongful conduct, the plaintiffs seek treble damages under federal antitrust law, a permanent injunction to dismantle the market allocation scheme and BlueCard system, structural reforms to allow direct contracting and competition among Blue Cross Blue Shield plans, and monitoring and compliance oversight by the court. The Blue Cross Blue Shield defendants have not yet responded to the complaint.

The lawsuit details the plaintiffs’ theory of the case. Each Blue Cross Blue Shield entity is assigned an ESA — a geographic territory where no other Blue Cross Blue Shield plan may compete. BCBSA’s licensing agreement prohibits each Blue Cross Blue Shield entity from offering Blue-branded insurance outside their ESA. This eliminates competition among Blue Cross Blue Shield insurers, allowing each to act as a local monopoly. When a patient from one Blue Cross Blue Shield plan receives care in another plan’s ESA, the local Blue Cross Blue Shield plan (Host) processes the claim at its own (often lower) rates, forcing healthcare providers to be reimbursed at the Host plan’s lower rates even when treating out-of-state patients. Healthcare providers have no options. The Blue Cross Blue Shield plans outside of the Host’s ESA refuse to negotiate with the providers, relying instead on the BlueCard system, and only one Blue Cross Blue Shield plan may bid for a national employer’s business, further entrenching the market allocation scheme. As elaborate and disturbing as these allegations appear, they are reminiscent of litigation that Blue Cross Blue Shield was recently forced to settle.

Patients with Blue Cross Blue Shield health plans and the healthcare providers who treated those patients began filing lawsuits in 2013, alleging Blue Cross Blue Shield was guilty of anticompetitive conduct by using the same ESAs, license agreements, BlueCard program, and national accounts program to artificially suppress reimbursement rates for healthcare services. The lawsuits were rounded up in multi-district litigation in the U.S. District Court for the Northern District of Alabama — In re: Blue Cross Blue Shield Antitrust Litigation (MDL No. 2406), Case No. 2:13-cv-20000 — and was divided into a Subscriber Track for the patients with Blue Cross Blue Shield health plans and a Provider Track for the healthcare providers who treated Blue Cross Blue Shield’s subscribers.

On October 16, 2020, Blue Cross Blue Shield agreed to settle the Subscriber Track of cases for $2.7 billion to compensate consumers who purchased or were enrolled in Blue Cross Blue Shield commercial health plans, from February 7, 2008, to October 16, 2020. The settlement also included injunctive relief that required Blue Cross Blue Shield to eliminate its National Best Efforts Rule and to modify its Local Best Efforts Rule, which were used to limit non-Blue health plans from competing for business. The injunctive relief also required Blue Cross Blue Shield to modify its national accounts program to allow large employers (those with more than 5,000 employees) to request a second bid from a different Blue Cross Blue Shield plan, and to restrict its use of most favored nation clauses in provider contracts, especially in states where Blue Cross Blue Shield has high market share. A monitoring committee was installed to oversee Blue Cross Blue Shield’s compliance for five years.

On October 4, 2024, Blue Cross Blue Shield agreed to pay another $2.8 billion to settle the Provider Track of cases, which would effectively bring the 12-year litigation to a close. This settlement resolves claims brought by healthcare providers against Blue Cross Blue Shield entities, alleging antitrust violations under the Sherman Act through conspiracies to limit competition in the health insurance market, particularly through geographic market allocations and restrictions on provider contracting. The providers’ settlement also included injunctive relief, whereby Blue Cross Blue Shield is to implement significant changes to its business practices, including an expansion of provider contracting in contiguous areas, the removal of restrictions that limited access to certain provider networks, reforms to the BlueCard program to mandate timely claim payments, interest penalties for late payments, real-time messaging and claims tracking systems, appointment of BlueCard executives to resolve escalated provider issues, greater transparency and data sharing through enhanced access to member eligibility and benefits data, and disclosure of third-party administrators involved in claims decisions. A monitoring committee again was installed to oversee compliance for five years.

The lawsuit by Boston Children’s Hospital and its affiliates will reexamine Blue Cross Blue Shield’s anticompetitive conduct and force Blue Cross Blue Shield to demonstrate its compliance with the injunctive relief provisions of the subscriber and provider settlements of the In re: Blue Cross Blue Shield Antitrust Litigation. This lawsuit will also shine a bright light on Blue Cross Blue Shield’s use of its massive warehouse of health insurance claims data to lower reimbursement rates. The Blue Cross Blue Shield entities agree to share with each other (but not with healthcare providers) confidential reimbursement payment data and other competitively sensitive information. Blue Health Intelligence (“BHI”) acts as a licensee of BCBSA and warehouses claims pricing data for more than 115 million insureds in what is known as the BCBSA National Data Warehouse Core. BHI collects this confidential claims data from the various Blue Cross Blue Shield entities and uses this data to perform analytic reports and monitor the contracting activities of other health plans, thereby further reducing reimbursements rates paid to healthcare providers. As reimbursement rates are suppressed, the claims data being analyzed and reports prepared by BHI will reflect and encourage even lower reimbursement rates by the various Blue Cross Blue Shield entities.

Most doctors upon graduating medical school pledge a modern version of the Hippocratic Oath to use the best of their ability and judgment; to respect and share their knowledge of medicine; to respect the privacy of their patients; and to remember that they do not treat a fever chart or a cancerous growth, but a human being in need of care — one whose illness or injury may affect the person’s family and economic stability. The oath typically concludes with a special vow to always act to preserve the finest traditions of being a doctor and to experience the joy of healing those who seek their help. Healthcare providers have willingly undertaken a tremendous obligation to maintain public health and to care for those who are suffering with human compassion. Far too often health insurance companies like Blue Cross Blue Shield, with their refusal to pay what is owed and justified, their administrative traps and snares, and their unduly burdensome appeals and grievance processes, drain the joy of healing from our best and brightest physicians. Lawsuits like the one filed by Boston Children’s Hospital seek to hold these health insurance companies accountable for their drain on our healthcare system.

If you are a healthcare provider who has experienced under-reimbursements by Blue Cross Blue Shield and other commercial health insurance companies, or if you’d like more information about this article, please contact AGG Healthcare Litigation attorneys Rich Collins, Damon Eisenbrey, or Jeremy Ritter-Wiseman.