Blue Shield of California is in deep water again. The nonprofit insurer--which as of last week no longer holds its tax-exempt status in the state of California--is now refusing to disclose how much it will spend to acquire Monterey Park-based insurance company Care1st, reported the Los Angeles Times.
Blue Shield hopes that state regulators grant the insurer confidentiality throughout the acquisition process. However, the California Department of Managed Health Care has yet to reach a decision regarding the insurer's confidentiality request, the article noted.
Blue Shield and Care1st asked regulators to keep certain details pertaining to the deal out of public view. Nor did they announce the terms of the deal when it was first annouced in December.
The issue resurfaced after the department received a public-records request regarding the transaction from the Times and in light of reports that the previously tax-exempt nonprofit Blue Shield has $4.2 billion in reserves. That's more than four times what Blue Cross Blue Shield requires member insurers to hold to cover future claims, FierceHealthPayer previously reported.
Blue Shield defended itself by saying it intends to reveal the price once the deal is final later this year. Blue Shield may dish out as much as $1.2 billion for Care1st, which has more than 500,000 members, according to the Times.
Consumer advocates say releasing the numbers on the Blue Shield and Care1st deal is justified given last week's tax-exempt status debacle, the article said. Not immediately disclosing the price of a deal, and doing so after the fact in securities and regulatory filings, is behavior typically reserved for for-profit insurers, the advocates say.
"I think a nonprofit insurer building up these tremendous reserves should be accountable for how it uses that money," Gerald Kominski, director of UCLA's Center for Health Policy Research, told the LA Times. "The scrutiny is long overdue."
- here's the LA Times article