Dive Brief:
- At the insistence of consumer advocates, the California Department of Managed Health Care (DMHC) will hold a hearing on Blue Shield of California's proposed $1.25-billion acquisition of Care1st, a Medicaid insurer.
- One of the issues that is raising a red flag for the consumer advocates is that Blue Shield recently lost its tax-exempt status after a lengthy audit. Also, despite having more than $4 billion in financial reserves, the company has still been raising prices.
- Both of these issues have raised questions as to whether or not Blue Shield is still serving as a not-for-profit.
Dive Insight:
Blue Shield is protesting the tax board ruling and says it plans to stay a nonprofit no matter what the outcome; a company spokes person said it "welcomes the opportunity to share how the acquisition of Care1st furthers our mission by serving Medi-Cal beneficiaries."
Both Blue Shield and Care1st will have an opportunity to justify their rationales for the deal at the June 8 hearing. The public will also be given an opportunity to speak.
"We view DMHC's role as especially critical at this juncture with the confluence of Blue Shield's proposed acquisition, the withdrawal of its state tax-exempt status by the Franchise Tax Board, and the concerns we have previously expressed about Blue Shield's surplus growth," four consumer groups wrote in a letter last month to state officials.