Maryland Legislators OK ‘Strict Conditions’ for Carefirst/WellPoint Deal
Maryland lawmakers last night approved legislation setting such "strict conditions" for the sale of CareFirst BlueCross BlueShield to Thousand Oaks-based WellPoint Health Networks that CareFirst may end up "scuttling the deal," the Washington Post reports. According to the Post, many Maryland legislators harbor "deep reservations" about the proposed merger between CareFirst -- Maryland's last remaining "insurer of last resort" -- and the California-based, for-profit WellPoint. The legislation contains the following provisions:
- Requires WellPoint to purchase CareFirst in cash (Mosk, Washington Post, 4/9). The original contract for sale between CareFirst and WellPoint called for $850 million of the $1.3 billion deal to be paid in WellPoint stock.
- Prevents Maryland Insurance Commissioner Steven Larsen from approving any deal that includes "executive bonuses that are contingent on the closing of the transaction." The original deal called for top CareFirst executives to receive $33 million in payouts if the deal goes through, including $9 million for CareFirst CEO William Jews.
- Allows Larsen to revoke CareFirst's certificate of operation in Maryland if it "attempts to thwart a denial of its Maryland conversion" to for-profit status by moving its assets to the District of Columbia and converting there.
- Guarantees the state General Assembly a chance to reject the deal even if Larsen approves it this year (Dresser/Salganik, Baltimore Sun, 4/9).
- Puts the "burden" on CareFirst to prove that the deal is in the best interest of the state (Washington Post, 4/9).
The Sun reports that health care advocates "praised" the legislation. "This is tremendous. We believe this deal is not in the best interest of the people of Maryland, and we want [CareFirst] to stay a nonprofit. So, anything that makes it harder for CareFirst to become a for-profit is good," Vincent DeMarco, executive director of the Maryland Citizens' Health Initiative, said. WellPoint spokesperson Ken Ferber said his company would have to review the legislation before deciding on a final course of action on the purchase of CareFirst. The Sun reports that Ferber said he was "not sure" how long that review would take (Baltimore Sun, 4/9). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.