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An Overview
Arkansas Blue Cross and Blue Shield
Founded in 1948, Arkansas Blue Cross and Blue Shield, an Independent Licensee of
the Blue Cross and Blue Shield Association, is the largest health insurer in Arkansas,
serving approximately 40 percent of the fully insured market. Arkansas Blue
Cross and its family of affiliated companies have more than 2,550 employees.
Non-profit Organization
Arkansas Blue Cross differs from commercial insurers in several ways. Arkansas Blue
Cross is a non-profit mutual insurance company. That means that nearly all the money
we collect as premium is paid out in benefits for customers — on the average, nearly
85 cents of every dollar. The remainder — about 15 cents of every dollar — is used for
operating expenses and reserve funds, which we are required by law to maintain.
As a non-profit, mutual insurance company, Arkansas Blue Cross is owned by its policyholders,
not by stockholders. This means that premium dollars are used solely to pay claims and
administrative costs, not to pay stock dividends. Any excess funds are held in reserve for
payment of future claims. Arkansas Blue Cross must maintain a fiscal balance between premium
income and benefits paid to ensure that we have the ability to continue to offer these products
and to pay policyholder claims in the future.
Locations
The main office of Arkansas Blue Cross is located at 601 S. Gaines
Street in downtown Little Rock.
Arkansas Blue Cross operates full-service regional offices serving seven designated
geographic areas of the state. The Regional Offices, headquartered in Fayetteville,
Fort Smith, Hot Springs, Little Rock, Jonesboro, Pine Bluff and Texarkana, offer sales,
customer service, medical management and provider relations services to counties in their
parts of the state.
Pinnacle Business Solutions, Inc. (PBSI), a wholly owned affiliate of Arkansas Blue
Cross, is the Medicare Part B (physicians' benefits) contractor for Louisiana, Oklahoma,
eastern Missouri and New Mexico. PBSI has offices in Baton Rouge (193 employees),
Oklahoma City (157 employees), Warwick, Rhode Island (15 employees) and St. Louis
(four employees). PBSI also administers the Medicare Part A (hospital benefits) and Part B
programs in Arkansas (437 employees in Little Rock/North Little Rock). PBSI maintains an
office in Jacksonville, Florida (19 employees) that provides some of the technical support
for our Fiscal Intermediary Standard System (FISS) contract, and one employee in Baltimore.
Membership
The fully insured membership served by Arkansas Blue Cross at year-end 2005 was
425,159.
Market Share
As reported by the National Association of Insurance Commissioners (NAIC), there
were 379 companies in Arkansas selling accident and health insurance in 2005 (the
most recent year available).
As compiled by the NAIC report, Arkansas Blue Cross had a 40.6 percent market share of
the total accident and health insurance premiums written in Arkansas in 2005. The market share
of Health Advantage, an affiliated HMO company, was 7.7 percent in 2005. Health Advantage is 50
percent owned by Arkansas Blue Cross, with the remaining ownership divided between Baptist Health
(25 percent) and 256 Central Arkansas physicians (25 percent).
Blue Cross and Blue Shield Association Affiliation
Arkansas Blue Cross and Blue Shield is a member of the Blue Cross and Blue Shield Association. This means Arkansas Blue Cross
has licenses from the Blue Cross and Blue Shield Association to offer health insurance benefits
and related services under the Blue Cross and Blue Shield names and service marks in the state
of Arkansas.
As a Blue Cross and Blue Shield Association member Plan, Arkansas Blue Cross is managed and
controlled by its own community-based Board of Directors, which must contain a majority of
"public members". Public members are people from the community who are not employed in the
health-care industry. Consequently, the Blue Cross and Blue Shield Plans have a strong commitment
to their local communities and customers that is not necessarily shared by commercial insurance
companies.
Neither the Blue Cross and Blue Shield Association nor the other member Plans of the Blue Cross
and Blue Shield Association act as guarantors of the financial obligations of Arkansas Blue Cross
and Blue Shield. However, Arkansas Blue Cross and Blue Shield and the other member Plans in the
Blue Cross and Blue Shield Association are subject to uniform financial standards, established
by the Blue Cross and Blue Shield Association, that are intended to foster a system in which each
member Plan maintains adequate financial resources to meet its obligations to its customers.
National Institute for Health Care Management (NIHCM) Affiliation
In 1993, Arkansas Blue Cross joined with 11 of the nation's leading health care companies to form
the NIHCM. The NIHCM is a non-profit organization based in Washington, D.C., that was established
to: 1) sponsor high-quality, non-partisan research of health care issues; 2) act as a clearinghouse
for research on health care management and state managed care data; and 3) promote innovation to
continuously improve the health care system.
History of Arkansas Blue Cross
After World War II, Arkansas' health-care system found itself at a turning point.
In April 1946, two major organizations (the Arkansas Medical Society and the Arkansas
Hospital Association) almost simultaneously began looking into the possibility of
starting a statewide hospital and medical insurance program - an idea that was rapidly
taking root in other parts of the nation.
The two groups quickly discovered they were investigating the same concept, so they
decided to join forces. In June 1946, a joint committee took a fact-finding trip
to Chicago and met with officials with the national Blue Cross Commission and other
health-care leaders.
After much deliberation about whether the program should be commercial or nonprofit
in nature, the group finally decided to solicit proposals from the 114 carriers
licensed to write hospital and surgical coverage in Arkansas. Only six responded,
but they all felt the proposed coverage was far too liberal. The group asked for
suggestions from the bidders. None were accepted.
The group eventually settled on a program offered by the John Marshall Co. (a new
firm formed by individuals from other Blue Cross plans). The company was long on
experience but short on capital, and by 1948, the company was forced to close its
doors.
Because of their commitment to Arkansans who enrolled in the John Marshall plan,
the two groups decided to combine their resources and secure some additional funding
to found a new, nonprofit venture that would adhere to the principles of the Blue
Cross and Blue Shield Commission.
The physicians' group provided a loan of $10,000, the hospital organization contributed
a $14,425 bed-assessment loan, and the Arkansas Farm Bureau Federation added a $5,000
loan. And on Dec. 3, 1948, Arkansas Insurance Commissioner Jack G. McKenzie approved
the articles of incorporation of Arkansas Medical and Hospital Service, Inc., which
eventually became Arkansas Blue Cross and Blue Shield.
The joint committee hired Jack L. Redheffer of Kansas City as the organization's
first executive director, and the fledgling insurer set up shop in Room 815 of the
Rector Building at Third and Spring streets with just five employees and a lot of
enthusiasm.
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