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State lawmakers grilled officials with Blue Cross and Blue Shield of Louisiana for nearly eight hours Monday over the proposed $2.5 billion sale of the local nonprofit to Indiana-based Elevance Health, a for-profit company that is one of the nation’s largest insurers.
Legislators, who came prepared with detailed questions about every aspect of the complex transaction, returned repeatedly throughout the marathon hearing to Elevance’s track record in other states. The company has racked up more than $26 million in regulatory fines for violations that included denying coverage of needed medical care, failing to cover preventive service like immunizations and breast cancer screening, and failing to pay claims in a timely manner.
Louisiana, where Elevance administers the Healthy Blue Medicaid plan, was among the seven states where the company has incurred fines.
“This is alarming,” said Sen. Jay Luneau, a Democrat from Alexandria. “I have real serious concerns about what is going to happen if this deal goes through.”
The fresh scrutiny of the deal by lawmakers comes a little more than a week before the state Department of Insurance convenes a two-day hearing, beginning Ash Wednesday, to determine whether the reorganization and sale of the company is in the best interest of Blue Cross policyholders and the state as a whole. Nearly half of Louisianans get their insurance from Blue Cross.
Legislators do not have legal authority to approve or deny the deal. That power lies with Insurance Commissioner Tim Temple and with two-thirds of the Blue Cross members who have voting rights, about 95,000 of the total 1.9 million Blue Cross customers in the state.
Still, as the battle over the controversial deal intensifies, legislators are under pressure from constituents both for and against the sale, and sought Monday to bring new information to light.
“This is a very significant deal,” said Sen. Patrick McMath, a Republican from Covington and chairman of Health and Welfare Committee, which held the joint hearing with the Senate Insurance Committee. “We felt it was incumbent on us to ask the questions.”
Denials of coverage
Some of the new facts that came to light at Monday’s hearing were in a report compiled by the Louisiana Department of Insurance that detailed the list of fines of $250,000 or more that Elevance has incurred since 2019 in states around the country. The report listed a total of 22 fines in seven states, totaling $26.1 million. The fines were levied on both Medicaid plans that Elevance administers, which are paid for by federal and state governments, as well as on the company’s commercially insured plans.
The largest single fine issued was in California, where the company’s Anthem Blue Cross Partnership plan was fined $11.4 million in 2019 for improperly dealing with more than 48,500 grievance or appeal notices.
The company was fined $5 million in Georgia for failing to adopt procedures for the prompt investigation and payment of claims to policyholders and providers between 2018 and 2021, and was also cited for numerous provider complaints and for claims processing errors.
In Louisiana, where Elevance runs the Healthy Blue Louisiana Medicaid plan, which provides insurance to 245,000 low-income customers, the company was fined $250,000 in July 2019 because Healthy Blue’s pharmacy benefit manager improperly steered enrollees to certain providers, in violation of its contract with the state. Six months later, the company was fined an additional $1.2 million for failing to meet quality performance measures, including not following up with patients discharged from a hospital stay.
“This gives me heartburn,” Luneau said.
Morgan Kendrick, an executive vice president with Elevance, tried to answer some of the concerns about the company’s performance in other states. He said in some states, the company has challenged the fines because regulators had erred. In other states, like Georgia, the company made changes to its policies and procedures and is no longer experiencing problems, he said.
As for Louisiana, Dr. Christy Valentine Theard, president of Healthy Blue Louisiana, said she could not immediately provide information about the nature of the fines the company received in the state.
A spokesman for the Louisiana Department of Health could not immediately provide additional information about the fines.
Blue Cross officials have previously said they looked into regulatory issues with Elevance and didn’t find anything that suggested the company was different from other large national insurers.
Focus on Pennington
Lawmakers also drilled down on what the sale of the nonprofit company to a for-profit company could do to health insurance premiums in a poor state with the worst health outcomes in the nation; how proceeds from the sale will be divided between a new nonprofit foundation, Accelerate Louisiana and policyholders; and how the voting is being handled.
They called special attention to a curious provision in the plan to create Accelerate Louisiana, which will be a $3 billion foundation focused on addressing poverty and health inequity in the state. The provision prohibits the foundation from giving money for health research purposes to any higher education institution in the state except the Pennington Biomedical Research in Baton Rouge.
“You have $3.1 billion and the only institution that can receive funding is Pennington?” asked Sen. Adam Bass, R-Bossier City. “Why is that?”
Tim Barfield, a former Blue Cross member who is now board chair of the Accelerate Louisiana Initiative, said the stipulation was a condition imposed by Gov. Jeff Landry and his staff.
“That was a requirement of the attorney general, now governor,” Barfield said.
Landry, as attorney general and then a candidate for governor, opposed the sale last summer, which helped lead to Blue Cross’ decision to table the deal until after the fall elections. More recently, Landry has said he is not taking a position on the deal, though in a speech last week to the powerful Louisiana Hospital Association, he praised the benefits of creating Accelerate Louisiana.
It is unclear why Landry, who technically does not have regulatory oversight over the deal, stipulated that only Pennington can receive research dollars. Landry’s office did not respond to a request for comment.
Pennington officials could not be reached for comment.
What’s next?
Lawmakers also grilled Blue Cross about potential irregularities in the voting process and the way proxies are being collected. Under questioning, Blue Cross officials acknowledged that the same outside firm tabulating proxy votes is also soliciting members by phone to make sure they vote.
“The same group that can take a proxy vote over the phone is the same group calling to say, ‘Did you get your ballot?’” said Republican Sen. Thomas Pressly of Shreveport. “I am blown away.”
Following the hearing, McMath said the committees would compile today’s findings and present them to Temple in advance of next week’s regulatory hearings.
“This cake clearly is not baked yet,” McMath said. “After seven-and-a-half hours of testimony we found it difficult to come up with any real substantive advantages to selling our nonprofit Blue to a for-profit company.”
McMath said legislators plan to call a second hearing later this month, even if it is not until after the regulatory hearings have concluded. “There are still way too many questions,” he said.
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