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State legislators issued a critical report Thursday on the proposed $2.5 billion sale of Blue Cross and Blue Shield of Louisiana to Indiana-based Elevance Health, questioning the fairness of the deal’s regulatory and voting process, among other issues, on the same day that Louisiana’s powerful hospital association voiced its own opposition.
The report, sent by legislators to Insurance Commissioner Tim Temple, was issued ahead of a two-day regulatory hearing next week during which Blue Cross will make its case for why the deal should move forward.
Concerns over the acquisition of the Louisiana-based health insurer have built in recent weeks as state legislators raised questions about how it will affect health insurance premiums and whether the process to approve the deal is fair.
On Thursday, the Louisiana Hospital Association, which represents hospitals and health care systems across the state, came out publicly against the sale, at least for now, urging Temple “not to approve the deal” until an independent evaluation of Elevance’s activities in other states could be completed. The association also suggested several safeguards the commission could impose to make the deal more palatable.
State Treasurer Dr. John Fleming, a practicing physician, also said he opposed the deal, arguing that health insurance premiums will have to rise to make the deal worthwhile for Elevance.
Blue Cross did not respond to requests for comment on the report, which was based on testimony at a state legislative hearing Tuesday, and the other public opposition. In recent weeks, Blue Cross CEO Dr. Steve Udvarhelyi has said that while the insurer is financially strong, it is losing out to big national competitors, especially in its most profitable services lines.
The company has said it will be better able to serve customers in the future and slow ever-rising healthcare costs if it sells now to a larger company with better digital tools, telehealth platforms and its own pharmacy benefits manager.
In a prepared statement, Elevance suggested that the committee report and the comments from Fleming were “misinformation about the agreement” and said that the state shouldn’t let special interests stand in the way of the improved health care and services that a deal would bring.
“The record is clear: Elevance Health is a trusted source of health coverage to more than 47 million people across the country,” said the statement from Elevance spokesperson Leslie Porras.
Intense scrutiny
While elected officials and hospital executives have influential voices, they don’t have legal authority over the deal.
Approval power rests with Temple and some 92,000 Blue Cross policyholders with voting rights in the mutual, or member-owned, company. Two-thirds of those policyholders, about 3% of the 1.9 million people in Louisiana covered by a Blue Cross insurance plan, must approve the deal.
Critics of the deal fear that a for-profit company will raise customer premiums and cut reimbursement rates to doctors and hospitals in order to satisfy shareholders. They’ve also questioned the split of sale proceeds between a new foundation, known as the Accelerate Louisiana Initiative, and policyholders, and the focus areas of the foundation, which were revised late last year at the urging of then-Gov.-elect Jeff Landry.
In the report Thursday to the Department of Insurance, state senators focused on concerns about the way Blue Cross is conducting the proxy voting, a process that began earlier this month and must be concluded by Feb. 19.
The report accuses the company of “vote steering,” arguing that policyholders are not receiving any unbiased information about the sale in the information packets they are receiving from Blue Cross. Policyholders will receive a $3,000 payment if the deal is approved.
The report also raises questions that came to light at the legislative hearing Monday about the calls a third-party consultant hired by Blue Cross is making to policyholders.
“The voting process has been tainted by egregious vote steering intimidation and enticement methods,” said a letter accompanying the report and signed by the five Republican and three Democratic members of the Health and Welfare Committee.
The report also accused the company of “ballot influence techniques,” because proxy ballots show the “vote for” option in large, boldface type, while the “against’ option is in a much smaller font.
Blue Cross and Elevance did not respond to questions about the voting process Thursday, but in the legislative hearing said the process was fair and above board.
Louisiana Department of Insurance officials, who said they were not aware of the calls until Monday’s hearing, confirmed they are looking into the matter to determine “whether Blue Cross conducted the voting in accordance with acceptable proxy voting practices for corporate transactions and in accordance with state law.”
An Insurance Commission spokesman said Temple has wide discretion in regulating the voting process, but declined to discuss what might happen if the commission found ballots and phone solicitations sought to unfairly bias policyholders in favor of the deal.
Conditions
The Louisiana Hospital Association’s letter to the Insurance Commission raised a different set of concerns about the deal that also came to light during Monday’s testimony — the more than $26 million in fines Elevance Health has racked up since 2019 from state and federal regulators. Most of those fines were for denying claims for mostly Medicaid customers and failing to reimburse providers in a timely fashion.
Blue Cross has previously said it looked into fines and lawsuits against the company and that they were not out of line compared to other large, national insurers.
The LHA asked Temple not to approve the deal until he has done an independent market evaluation of the company focusing on its track record in other states. It also suggests several conditions Temple could impose on Elevance, in the event he approves the deal.
Those conditions include: allowing policyholders to pursue an independent claims review process if they’re denied coverage and requiring that Elevance seek approval from the insurance department before making changes to the doctors and hospitals in its network.
Elevance did not respond to a request seeking comment about those recommendations.
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