July 19, 2007

Blue Cross practices probed by regulators

Gilbert Chan

Sacramento Bee 

Fueled by hundreds of complaints by doctors and consumers, state regulators are taking a hard look at Blue Cross of California's business practices after its $16.5 billion acquisition by a giant Midwest health insurer three years ago.

The 1,600 complaints lodged since 2004 are raising questions about whether California's largest health insurer is meeting promises made to state regulators to win approval of a merger between Blue Cross' parent company, WellPoint Health Networks Inc., and Indiana-based Anthem Inc. Those state mandates expire in November.

The company, now called WellPoint Inc., is the nation's largest health plan, with 34 million members and more than $60 billion in revenue. Blue Cross covers more than 7 million Californians.

To win state approval for the merger, WellPoint agreed to a series of requirements, including a pledge to maintain adequate coverage for consumers and to not use premium increases to finance the merger. The insurer also agreed to spend $265 million for medical education and health programs for the poor.

"We have increased concerns about those commitments that were made," said Lynne Randolph, spokeswoman for the Department of Managed Health Care, the state's health plan regulator. "We have been hearing from a lot of different groups. We're not sure that this merger has been better financially for California."

As a result, the department will discuss post-merger issues during an Aug. 7 public hearing in Los Angeles.