Blue Cross and Blue Shield of Alabama
| Company type | Nonprofit |
|---|---|
| Industry | Health insurance |
| Founded | 1936 |
| Headquarters | Birmingham , United States |
Area served | Alabama |
Key people | Tim Vines (CEO and President) |
| Products | Health coverage, disability insurance, Medicare administration services |
Number of employees | Approximately 5,000 |
| Website | www |
Blue Cross and Blue Shield of Alabama (BCBSAL) is a nonprofit health insurer based in Birmingham, Alabama. Established in 1936, the organization provides health coverage to more than 3 million individuals and dominates the Alabama market with over 90% share. The company employs close to 5,000 staff members, with roughly 3,500 working at its Birmingham headquarters. BCBSAL also manages two subsidiaries—Cahaba Government Benefit Administrators and Cahaba Safeguard Administrators—both located in Birmingham. Despite BCBSAL’s strong market presence, Alabama continues to experience one of the nation’s highest uninsured rates, with nearly 10% of residents lacking health insurance.
Organization
Operating as a 501(m) nonprofit entity, BCBSAL functions under Alabama statutes as a "special health-benefit service plan" instead of a conventional insurance company. This legal status exempts it from routine state rate reviews unless there is a modification in its rate-setting procedures.
The company’s corporate framework includes:
- Alabama Industries Financial Corporation, which owns United Trust Insurance Company
- Preferred Care Services, owner of PCS LLC
- Prime Therapeutics, LLC along with the Caring Foundation
These affiliated organizations enhance BCBSAL’s operational capabilities and broaden its service portfolio within the healthcare insurance sector.
United Trust Insurance Company
BCBSAL acquired Modern American Life Insurance Company—originally founded in 1964—in 1986. Following litigation, the company transitioned away from life insurance to focus on disability coverage, rebranding as United Trust Insurance Company in 1988. It later took on risk management for BCBSAL’s long-term care policies and marketed short-term disability insurance. By the close of 2012, United Trust reported capital stock valued at US$1 million and surplus funds totaling US$986 million. The insurer collaborated with companies such as Able Benefit Solutions and Companion Life Insurance to distribute stop-loss and excess-loss reinsurance products. Although designated as an 18 U.S.C.§ 1033 insurer, this regulation was not applicable since it employed no staff.
Cahaba Government Benefit Administrators, LLC
Based in Birmingham, Cahaba Government Benefit Administrators (GBA) acts as a financial intermediary for the Centers for Medicare & Medicaid Services (CMS), overseeing Medicare fee-for-service claims in Alabama. Prior to reforms in Medicare contracting implemented in 2005, CMS granted Cahaba a no-bid contract. In January 2009, Cahaba was awarded a US$335 million contract over five years to administer Medicare Part B insurance across Alabama, Georgia, Tennessee, and Mississippi under the 'Jurisdiction 10 (J10) A/B Medicare Administrative Contract.' Additionally, Cahaba delivers Regional Home Health Intermediary services covering several states.
Cahaba Safeguard Administrators, LLC
Established in 2002 and headquartered in Birmingham, Cahaba Safeguard Administrators focuses on combating Medicare fraud. It is among twelve CMS contractors responsible for managing anti-fraud initiatives.
Leadership compensation
In 2013, former CEO Terry D. Kellogg received total remuneration of $4.84 million, comprising a base salary of $999,959 and bonuses amounting to $3.58 million—a rise of 95.5% compared to 2011. Employees frequently recognize the company as one of the top employers within the Birmingham metropolitan area due to its positive corporate culture and attractive compensation packages.
History
Originally established in 1936 under the name Hospital Service Corporation, the organization underwent a rebranding to Blue Cross-Blue Shield of Alabama in 1952, followed by a further name update to Blue Cross and Blue Shield of Alabama L in 1970. Membership numbers expanded significantly, rising from over one million by 1970 to surpassing three million across the country by 2016. Despite facing competitive pressures, BCBSAL continues to dominate the Alabama market with more than 90% share, a position strengthened as rivals withdrew from the Health Insurance Marketplace Exchange.
By the close of 2011, BCBSAL reported total assets of $2.4 billion, revenues reaching $4.1 billion, and net earnings of $257 million—a growth of 58% compared to the previous year. A federal survey conducted in 2010 ranked BCBSAL as providing the second most cost-effective employer-sponsored family health plans nationwide, with over 90% of premium income returned to members through benefits.
In 2012, the company maintained a surplus, referred to as "unassigned funds," amounting to $991 million, which represented roughly 3.3 months’ worth of claims payments. This substantial financial cushion effectively renders BCBSAL self-insured, granting it financial stability and independence from Alabama’s insurance guaranty fund—a state-operated emergency reserve analogous to the FDIC’s role in banking.
Since 2018, Tim Vines has held the positions of CEO and President at Blue Cross Blue Shield of Alabama, having previously served as Vice President and Chief Operating Officer.
Honors
- JD Power and Associates Member Satisfaction Awards – received in 2009–2014, 2016, and 2020
- Blue Cross Blue Shield Brand Excellence Award – earned for 21 consecutive years
- Four-star rating for Medicare Advantage Plan – awarded in 2020
- National Business Group on Health – recognized among Best Employers for Healthy Lifestyles from 2013 to 2015
- American Heart Association Fit-Friendly Company designation – achieved in 2012 and again in 2015
Lawsuits
In 1998, the case Sanderson et al vs. Blue Cross and Blue Shield of Alabama resulted in BCBSAL implementing new capital standards and modifying benefit rates by $208 million over a three-year period through a prospective rate adjustment initiative.
In 2012, BCBSAL was subject to seven antitrust lawsuits filed in Birmingham’s U.S. District Court, accusing the insurer of engaging in anti-competitive conduct.
In 2020, Blue Cross Blue Shield entities across six states initiated legal action against CVS Health Corp., alleging that CVS inflated generic drug pricing requests, thereby increasing insurer expenses.
External links
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- American companies established in 1936
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- Medical and health organizations based in Alabama
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- Companies of the United States by year of establishment