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Archive for Wednesday, January 9, 2002

Anthem battles allegations its promises are empty

January 9, 2002

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— Anthem Blue Cross and Blue Shield officials Tuesday vowed to provide quality service if allowed to acquire Kansas' largest health insurer, but Anthem opponents complained the company has failed to make specific commitments.

The two sides squared off before Kansas Insurance Commissioner Kathleen Sebelius during the second day of an administrative hearing on the proposed sale of Blue Cross and Blue Shield of Kansas to Anthem, an Indianapolis-based insurer that has acquired Blue Cross plans in eight states.

The hearing was expected to wind up today.

David Frick, chief administrative officer for Anthem, said the company would continue the close ties with hospitals and doctors that already exist with Kansas Blue Cross.

But Karen Eager, a Lawrence attorney representing nurses and health-care advocates, complained that Anthem was speaking in "corporate generalities."

"You haven't given the citizens of Kansas a real commitment as to what is going to happen," Eager said.

Groups representing Kansas doctors and hospitals also oppose the deal, saying that Anthem's for-profit motives will hinder health care in the state. The Insurance Department has stated that insurance premiums in some cases will increase 6 percent to 7 percent if Kansas Blue Cross is owned by Anthem.

But officials with Kansas Blue Cross and Anthem say the merger is necessary to ensure quality insurance coverage in the future.

Kansas Blue Cross has asked its policyholders to give up their ownership rights in return for cash payments. Once Kansas Blue Cross is converted to a stock company, Anthem has proposed to buy it for $190 million.

Policyholders would receive about $320 million, which includes the sale price from Anthem and part of Kansas Blue Cross' reserves.

But on Tuesday, opponents of the deal hammered Anthem officials for a part of the proposal that would withhold $48 million from the policyholders pending resolution of possible litigation between Kansas Blue Cross and the federal government.

The U.S. Department of Health and Human Services has subpoenaed documents from Kansas Blue Cross in relation to an investigation into claims submitted to Medicare, according to officials with the insurance companies. Federal officials have refused to comment on the action.

Anthem officials say they need to hold back the $48 million in escrow to protect their liability should they purchase Kansas Blue Cross.

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