Blues Bank Moving To Plan B

The Blue Healthcare Bank is moving to adopt alternative ways of doing consumer-driven accounts now that its approval as an Exante-model bank is delayed by regulators. CDMR has learned that the BHB is developing a banking capability with Fiserv that may allow Blues plans to do HSAs and debit cards without actually owning their own bank.

The Blues are being secretive about the change in strategy in order not to jeopardize approval of their own bank, and to avoid market confusion during open enrollment.

Individual Blues plans will be offered the option of using the new Fiserv platform, and several are already signed up and preparing for a rollout in January. The platform will use CareGain’s multi-account technology which is already being adopted by the Blues national accounts operation. Most other evolving CDH products such as lines of credit, debit card links to member portals, and real-time adjudication are included.

Outside sources said that the Fiserv bank platform will allow Blues plans to operate as if they owned a bank, doing debit cards and integrated claims functions. Blues plans will also be able to retain their existing custodian relationships, or use the Fiserv connection to any other custodian.  Officially the Blues are still saying they expect to get their own bank approved.

The idea of a Blues bank has not exactly caught fire since the plan was announced last December. A Google search finds that the most popular Blues banks are online libraries containing names such as Muddy Waters and Howlin’ Wolf. The national association of Blues plans has been listing the BHB logo at the bottom of its press releases, but always mentions it as an “also planning to offer” with no details or deadlines.

The move to Fiserv is a smarter move for the Blues that could create a huge new competitor in the HSA world. A typical Blues will be able to do HSAs without actually owning a bank, which many consider a plus. Also, the ability to let employers and employees use any custodian they want – in addition to existing custodians – is likely to drive market adoption although it may shake up existing deals.

But the biggest reason the Blues can’t wait is competition. Exante for example now has 22 carriers using its platform and is likely to being picking off Blues plans. And there are also several bank technology firms and even national banks that are capable of delivering banking platforms to Blues plans. HSA Bank itself already has several Blues plan clients.

Some view these as a serious threat to the Blues national association, which will have to act fast if it wants to avoid losing the entire national bank concept. Others say the battle is over – Blues plans don’t even need a single bank and can use Fiserv to do their own individual banks using common branding without all the expense and risk of being a bank.