Merger, Acquisition, of Health Plans Called Off After Opposition

Feb. 14, 2024
Two different business combinations involving health plans in Oregon and Louisiana merging with or being acquired by out-of-state health insurers, have both been called off after opposition from regulators and state legislators

Not one, but two health plan mergers have been called off within the past few days in mid-February, based on a variety of challenges. One planned merger was to be that of the Portland-based CareOregon, the state’s largest Medicaid insurer, and the Long Beach-based SCAN Group of California. The other was to be the Indianapolis-based Elevance Health’s acquisition of the Baton Rouge-based Blue Cross Blue Shield of Louisiana.

With regard to the first planned and now abandoned business combination, Willamette Week’s Nigel Jacquiss wrote on Feb. 13 that “A controversial combination of CareOregon, the state’s largest Medicaid insurer, and SCAN Group of California, a Medicare Advantage plan, is not going to happen. The deal, announced in 2022, faced criticism from an independent oversight panel and some of the architects of the Oregon Health Plan, the state’s often innovative Medicaid program, including Dr. John Santa and former Gov. John Kitzhaber. Public comments also waved a warning flag. The deal was pending in front of Oregon state regulators, but this afternoon, Dr. Eric Hunter, CareOregon’s CEO, sent out an email to his staff telling them the deal was off.” Jacquiss reported that Dr. Hunter messaged CareOregon staff, writing that “Both CareOregon and SCAN are deeply committed to preserving and protecting nonprofit, locally based health care. When we embarked on the journey to form HealthRight Group, we did so with the belief that the state would recognize it as an opportunity to uphold these values. Despite our utmost efforts, key stakeholders continue to raise concerns about our proposal.”

The opposition to that planned merger came from a significant source: the Medicaid Advisory Committee. In a Dec. 6 memo to Dave Baden, interim director of the Oregon Health Authority, Vivian Levy, the interim Medicaid director at OHA, and Ali Hassoun, the interim director of health policy and analytics at OHA, the Medicaid Advisory Committee wrote that “The Medicaid Advisory Committee (MAC) is a federally mandated committee with the charge of advising Oregon on Medicaid policy and planning through a consumer and community lens. We appreciate that OHA put a requirement in Oregon Administrative Rule 410-141-5280 that the Office of Actuarial and Financial Analytics engage the MAC when carrying out its duty to review any Form A Filing whenever a coordinated care organization is involved in a merger or acquisition. The MAC has serious concerns, as follows, about the lack of information shared in the public Form A Filing regarding specifically how SCAN’s acquisition of CareOregon will benefit the CCOs as they carry out their contractual obligation to serve Oregon Health Plan (OHP) members. We need additional information about SCAN’s commitment to and experience in eliminating health equities. Further, the flow of taxpayer dollars leaving the state and the potential loss of local control of CareOregon’s affiliated CCOs suggests that the merger may harm Oregonians by reducing access to health care, lessening the commitment to addressing health inequities, and diverting financial resources currently available to local communities. For these reasons, we are recommending that, in the absence of sufficient responses to the questions below, OHA disapprove the SCAN/CareOregon transaction.”

The second planned but now-abandoned business combination involved Elevance Health (formerly Anthem Health), which covers more than 115 million people in dozens of states, through a variety of plans, many of them former Blue Cross and Blue Shield health insurers, and Blue Cross Blue Shield of Louisiana, which covers 1.9 million Louisianans. Michael Scheidt and Bonnie Bolden reported on Feb. 14 in BRPROUD, a Baton Rouge news publication, that “Blue Cross Blue Shield of Louisiana has withdrawn its plan for sale to Elevance Health. Both companies have issued statements about the change. The sale could not have been finalized without the OK of Commissioner of Insurance Tim Temple and 94,000 Blue Cross policyholders. The vote had been set for Feb. 21. Louisiana Senate’s Health & Welfare Committee and Insurance Commission held eight hours of hearings on the issue and later issued a 400-page report with 30 findings that lawmakers found concerning about the proposal. Elevance issued a letter from 17 healthcare professionals supporting the sale in response to the report,” they noted.

Per that report, Scheidt and Bolden had reported on Feb. 8 that “Louisiana Senate’s Health & Welfare Committee and Insurance Commission members released a report on the proposed restructure and sale of Blue Cross Blue Shield of Louisiana to Elevance Health of Indiana. The almost-400-page report covers 30 findings that lawmakers found concerning, and a copy was provided to Commissioner of Insurance Tim Temple. According to a news release from the lawmakers, Temple and “two-thirds of 95,000 Blue Cross policyholders” must OK the sale for it to happen.” And it quoted State Senator Patrick McMath as stating that, “Earlier this week, I presided over a nearly eight-hour hearing on the reorganization and sale of Blue Cross to Elevance, and I am more convinced than ever that this deal is bad for 95,000 policyholders who do get to vote, the 1.8 million who do not get to vote, the 34,00 healthcare providers in the Blue Cross network, the 2,500 Blue Cross employees and honestly the 4.6 million people who live in Louisiana.”

In that Feb. 8 report, Scheidt and Bolden further wrote that “Legislators said they still have unanswered questions about: Regulatory issues and potential vote steering in favor of Blue Cross. Quality of Elevance Health services. Forming a new foundation with sale proceeds of around $3 billion from policyholders, called the Accelerate Louisiana Initiative. A spokesperson from Elevance Health released a statement in response to the report.” At the same time, a New Orleans attorney had just filed suit, hoping to block that sale. “There are some fundamental problems with how this is being put forth to the public, especially the very one-sided voting process that includes blatant vote steering and monetary enticement,” State Sen. McMath told BRPROUD. “This proposal is not good, and it needs to be stopped now.”

 

 

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