Premera Blue Cross to cut 285 positions due to COVID-19

Premera Blue Cross in Washington State is eliminating about 285 positions, an estimated 8% percent of its workforce.

A Premera spokesman said the job reductions are necessary due to COVID-19's impact on the economy and the necessity to reduce costs and pass those savings onto its customers.

"Unfortunately, the global pandemic and the subsequent impact to the economy has forced us to move beyond our normal efficiency and cost-saving efforts to eliminate approximately 285 non-customer facing positions out of 3,442 employees," said Premera spokesman Dani Chung. "We have pledged to do all that we can to help employees through this difficult transition, including offering generous severance packages and access to company-funded out placement services."

The layoffs are not related to a settlement announced last month in its agreement to pay $6.8 million to settle potential violations relating to the data breach of over 10 million people, according to Chung.

WHY THIS MATTERS

Premera Blue Cross is one of the largest insurers in the Pacific Northwest.

During the pandemic, most health insurers have seen profits rise due to paying less for care as routine procedures and elective surgeries were postponed.

UnitedHealth Group, which owns the nation's largest insurer, UnitedHealthcare, saw revenues rise during the third quarter, while seeing its earnings drop. The decline, UnitedHealth Group said, reflected consumer financial assistance measures, as well as COVID-19 care and testing costs and broader economic effects.

Premera said that since the pandemic began, it has offered more than $100 million in advance payments to doctors and hospitals to help them keep the doors open during the lockdown, more than $65 million in premium relief and rebates to its customers and $5 million to local nonprofits to address issues of health equity and social justice.

Plan mix also affects insurers, as the commercial market has been impacted by job losses. Health insurers invested in Medicare Advantage plans have only seen enrollment grow.

Premera offers individual and group commercial plans, Medicare Advantage and a BlueCard plan for Blue Cross and Blue Shield customers located in other states.

In May, Premera announced it would offer virtual primary care health plans that had a lower premium than standard PPO plans. Washington State employers were able to begin purchasing the Premera NOW plan for availability on October 1. 

THE LARGER TREND

On September 25, the U.S. Department of Health and Human Services Office of Civil Rights said Premera Blue Cross had agreed to pay $6.85 million and to implement a corrective action plan to settle potential violations related to a data breach that affected over 10.4 million people.

The resolution represented the second-largest payment to resolve a HIPAA investigation in OCR history, HHS said. 

On March 17, 2015, Premera filed a breach report on behalf of itself and its network of affiliates stating that cyberattackers had gained unauthorized access to its information technology system using a phishing email to install malware. The malware accessed the IT system in May 2014 and went undetected for nearly nine months, resulting in the disclosure of more than 10.4 million individuals' protected health information, including their names, addresses, dates of birth, email addresses, Social Security numbers, bank account information and health plan clinical information. 

OCR's investigation found systemic noncompliance with the HIPAA Rules, including failure to conduct an enterprise-wide risk analysis, and failures to implement risk management and audit controls.

PBC operates in Washington and Alaska, and is the largest health plan in the Pacific Northwest, serving more than two million people, HHS said.

ON THE RECORD

Spokesman Dani Chung said, "We are continually exploring how to make healthcare work better, while offering health plans that best meet the needs of our customers and their families. While Premera remains strong financially, we recognize the tremendous toll the global pandemic has taken on the economy and many of our group and individual customers. Now, more than ever, affordability is the number one barrier to receiving high quality care and we must do all that we can to reduce our costs and pass those savings onto our customers."
 

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com