Blue Cross to toss proxy ballots, start process over in proposed sale to Elevance Health [The Advocate, Baton Rouge, La.]

Aug. 22—Amid growing political pressure on state insurance regulators to slow the proposed sale of Blue Cross and Blue Shield of Louisiana to Elevance Health, Blue Cross officials said this week they will rip up any proxy ballots they have received from policyholders and start the process over.

In the coming days, Blue Cross will reissue new ballots to their approximately 92,000 policyholders, who must approve the $2.5 billion sale of the Baton Rouge-based nonprofit to the publicly-traded Elevance, one of the largest companies in the nation, by a two-thirds margin.

Blue Cross will also reschedule a meeting and official vote until after the Louisiana Department of Insurance has held a two-day hearing on the proposed sale, company officials said.

That hearing had been scheduled for this week but was postponed until October, after Blue Cross asked Insurance Commissioner Jim Donelon for more time to respond to critical questions raised in recent days by policyholders, state lawmakers and two independent consultants hired by Donelon's office to analyze the deal.

Louisiana Attorney General Jeff Landry, the current frontrunner in the race for governor, has also been critical of the proposed sale, and is investigating whether it could violate state anti-trust laws.

The powerful Louisiana Hospital Association, which represents some 200 hospitals and hospital systems around the state, added its voice this week to the growing chorus of those urging Donelon to put the brakes on the approval process.

In an Aug. 21 letter to Donelon, LHA President Paul Salles echoed concerns about the structure of the deal, which would return just 10% of sale proceeds to policyholders and put the rest toward the creation of a $3.2 billion social welfare foundation that would be controlled by a handful of Blue Cross board members.

The letter also noted that in other states where the company does business, Elevance "has been subject to a number of allegations of engaging in business practices that are detrimental to patients, healthcare providers and owners of self-funded plans."

"Until these and many other concerns have been properly addressed, we encourage the department to not move forward with any necessary approvals of the proposed transaction," the letter says.

Elevance declined to comment on the letter, referring questions to Blue Cross.

In a prepared statement, Blue Cross reiterated its position that the sale will bring better coverage and service to customers in Louisiana. As for the LHA's pointed criticism of Elevance's track record in other states, Blue Cross spokesperson Cindy Wakefield said, "although the LHA has not contacted us directly to raise concerns, we have had productive conversations with many of the members ... we look forward to enhancing our ability to strengthen these partnership with the additional tools and capabilities we will get as part of Elevance Health."

Questions and delays

The deal, first announced in January, has come under fire in recent weeks, as stakeholders have begun to look closely at how the sale could affect rates and access to provider networks. Also under the microscope: how Blue Cross will split the proceeds between its policyholders and the foundation and how the foundation will be run.

Following a nearly six hour hearing at the state capitol on Aug. 16, Blue Cross asked Donelon's office to postpone until Oct. 5-6 a two-day regulatory hearing that was supposed to be held this week.

Because of that delay, the policyholder meeting and vote that was scheduled for Sept. 6 also will be pushed back, though Wakefield said the date has yet to be determined.

Both Donelon and policyholders must approve the reorganization of the company from a nonprofit to a for-profit stock company so that it can be sold. Though policyholders will be voting on the reorganization of the company, a vote to reorganize is effectively the same as a vote to sell.

Earlier this month, all 92,000 blue cross policyholder received a proxy ballot. Blue Cross could not say how many ballots have been returned but said those ballots will be invalidated.

Policyholders are those who have purchased individual Blue Cross plans, including subsidized plans purchased through the ACA exchange, Medicare Advantage and Medicare supplement policyholders, and employers that purchase group health plans for their employees.

Individuals insured through their company are not eligible to vote. Neither are those whose employer-sponsored health plans are self-funded, or those who have a Blue Cross HMO policy.

Headed to court

With the sale facing greater scrutiny, Donelon, who has said he wants to approve the deal before leaving office in December, faces a couple of difficult choices.

He could approve the deal as it is, but that would mean disregarding the opinion of two expert consulting firms hired by his office. He could approve it with certain conditions, or he could deny it altogether.

Whatever happens, Donelon's office said the proposed sale will likely end up in court because it is so controversial.

"We fully expect litigation,' said executive counsel David Caldwell.

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