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Questions and Answers Regarding the Proposed Blue Cross and Blue Shield Conversion and Merger

Prepared by the Maine Bureau of Insurance - Updated March 31, 2000

  1. What effect will the proposed transaction have on existing Blue Cross and Blue Shield of Maine (BCBSME) policyholders?

    The announcement should not have any immediate impact on existing policyholders. Claims should continue to be paid and subscribers should continue to interact with the company as they have done prior to the announcement. Questions should be directed to BCBSME first, (1-800-482-0966). If they are unable to assist you, then call the Maine Bureau of Insurance (1-800-300-5000).
  2. 2. What affect will the proposed transition have on health insurance rates?

    As part of their conversion filing, BCBSME is required to provide a comparison of their premium rates for the past 3 years to the 3 years post conversion. However, premium rates for only some BCBS products are regulated by the State.
  3. 3. Which BCBSME premium rates are subject to approval by the Superintendent of Insurance?

    Increases averaging 15.7% for HealthChoice and 27.3% for individual HMO members were recently approved and will be effective November 1, 1999. A Medicare Supplement Companion Plan filing requesting an average rate increase of 4.6% was recently approved by the Bureau. The requested effective date is January 1, 2000.
  4. I'm a current BCBSME subscriber what changes can I expect as a result of the announcement?

    There should be no immediate impact on subscribers. The proposed transaction was approved by the Superior Court and now is subject to the approval of the Superintendent of Insurance. Formal hearings begin on April 3 with a public comment session scheduled for Saturday, April 8 from 9:00 a.m. until 5:00 p.m. in the Central Conference Room at the offices of the Bureau of Insurance, 124 Northern Avenue, Gardiner Maine. If and when changes are instituted, Maine law provides for appropriate notification to the subscribers. If subscribers have questions they should contact BCBSME at (1-800-482-0966). The Maine Bureau of Insurance can also be reached at (1-800-300-5000).
  5. Is Anthem Insurance Companies licensed in Maine?

    Anthem Insurance Companies is not licensed in Maine. Anthem Insurance Companies is an Indiana domiciled mutual insurance company. It will need to become licensed to acquire the assets of the converted plan and operate as an insurer in its own right.
  6. Where is Anthem Insurance Companies, Inc domiciled?

    The company is domiciled in the state of Indiana. Anthem Insurance Companies, Inc. is a mutual insurance company providing life and health coverage through a number of subsidiaries. Originally incorporated in 1944 as Mutual Hospital Insurance, Inc., AICI went through a merger, a name change, and another name change before becoming known as Anthem Insurance Companies in 1996. They currently operate Blue Cross Blue Shield plans in Indiana, Ohio, Kentucky, and Connecticut. They are rated by A.M. Best as "A-" (excellent) and rated by Standard & Poors as "A".
  7. What are the recent financial results for Anthem?
  1999 1998 1997 1996
Assets $2,541,180,000 $2,618,790,000 $2,517,287,000 $2,029,716,000
Liabilities $1,096,964,000 $889,195,000 $947,090,000 $665,234,000
Capital Surplus $1,444,216,000 $1,729,595,000 $1,570,197,000 $1,364,482,000
Net Premium Written $1,109,265,000 $904,741,000 $846,042,000 $912,597,000
Net Income $201,742,000 $80,603,000 $45,613,000 $183,547,000

Source for figures - AM Best

  1. 8. What needs to be filed with the Bureau of Insurance by BCBSME?
    The plan of conversion from its current not-for-profit status to a stock health insurance company. The plan is lengthy and includes information responding to a number of standards included in Maine law regarding conditions that the Superintendent must consider before a conversion plan may be approved. The standards may be found in Title 24 M.R.S.A. §2301, subsection 9-D.
  2. What needs to be filed with the Bureau of Insurance by Anthem Insurance Companies?
    The plan for acquisition and control of Anthem Blue Cross and Blue Shield of Maine.
  3. Can interested parties seek to intervene in the proceedings before the Bureau of Insurance?
    The Maine Administrative Procedures Act provides for possible intervenors in administrative proceedings. Any person who can meet the statutory criteria for intervention will be able to participate in the proceeding. Members of the public will also have an opportunity to provide comments during the public hearing without becoming intervenors.
    Members of the public usually have the opportunity to speak either under oath at a hearing and to be questioned by the parties or to speak without taking an oath and not to be questioned. The Superintendent of the Bureau of Insurance will be the hearing officer on this matter and will make a decision on what procedures will be followed. He will issue an order on the procedures to be followed in this matter at a later date.
  4. What is the name for the proposed new stock insurance company?
    Anthem Blue Cross and Blue Shield of Maine
  5. What is the charitable trust plan?
    The charitable trust plan must describe the trust or trusts that will receive the ownership interest of the converted BCBS plan. It must be filed by BCBSME with the Attorney General at the same time the company files its plan of conversion with the Superintendent of Insurance.
  6. Does the charitable trust plan have to be approved?
    The charitable trust plan was approved by the Maine Superior Court.
  7. Are the two plans (conversion and acquisition) independent or linked?
    While the plans deal with separate transactions, the two plans are linked. In fact, the acquisition of BCBSME by Anthem cannot occur without the conversion. Legally, it is possible for BCBSME to convert to a stock insurer without the subsequent acquisition.
  8. How long will the review process take?
    This proposal is a complex transaction. While the law establishes some timing points it is not possible or prudent to establish a time frame at this point. The review by the Superintendent will be thorough and vigorous.
    The formal hearings began on April 3. Once the hearings are completed, the Superintendent has 30 days to issue a decision.
  9. What is the market value of BCBSME?
    That is an issue to be determined as part of the administrative hearing before the Bureau of Insurance. The law requires the Superintendent to review an independent market valuation of BCBSME as part of the proceeding.
  10. What types of issues could prevent this transaction from occurring? Or is this just a "done deal?"
    By no means is it a done deal. Maine law is fairly complex; that and other generally applicable laws have a variety of detailed standards that must be satisfied prior to approval. Also, business agreements of this nature often contain a number of provisions specifying terms and conditions pursuant to which either or both parties may back out of the transaction. The Bureau received the filing on September 15, 1999.  For the conversion to move forward, the Superintendent must make a determination that the terms and conditions of the conversion plan are fair and equitable.
  11. Wouldn't it be better for BCBSME to remain a not-for-profit entity?
    Maine law provides the option for the company to convert to a for-profit entity. The decision to do so was ratified by BCBSME's Board of Directors. Among the Board's fiduciary responsibilities is the need to insure that the company is in an appropriate financial condition to meet its' insurance duties (i.e. claims payment). This is true whether the entity is a for-profit or not-for-profit organization.
  12. What are the recent financial results for BCBSME?
  1999* 1998* 1997* 1996*
Assets $186,956,000 $157,381,000 $225,050,000 $234,667,000
Liabilities $156,611,000 $103,588,000 $186,662,000 $148,091,000
Reserves & Unassigned Funds $30,345,000 $53,793,000 $38,388,000 $86,576,000
Net Premium Written $511,186,000 $426,204,000 $521,521,000 $516,044,000
Net Income ($20,113,000) $1,457,000 ($48,529,000) ($12,278,000)

*Figures provided by Blue Cross Blue Shield of Maine in their annual filing to the Maine Bureau of Insurance.

  1. What are the recent financial results for Maine Partners Health Plan?
  1999* 1998* 1997* 1996*
Assets $21,613,000 $10,784,000 $2,904,000 $236,495
Liabilities $18,730,000 $6,783,000 $144,000 $177,000
Capital Surplus $2,883,000 $4,001,000 $2,760,000 $59,803
Net Premium Written $50,324,000 $21,158,000 N/a N/a
Net Income ($1,918,000) ($560,000) N/a N/a

*Figures provided by Blue Cross Blue Shield of Maine in their annual filing to the Maine Bureau of Insurance.

  1. What are the recent financial results for Central Maine Partners Health Plan?
  1999* 1998* 1997* 1996*
Assets $8,330,000 $6,014,000 $3,547,000 N/a
Liabilities $4,699,000 $2,456,000 $20,000 N/a
Capital Surplus $3,631,000 $3,558,000 $3,526,000 N/a
Net Premium Written $12,515,000 $6,996,000 N/a N/a
Net Income $88,000 $33,146 N/a N/a

*Figures provided by Blue Cross Blue Shield of Maine in their annual filing to the Maine Bureau of Insurance.

  1. 25. Will BCBSME be subject to premium taxes?
    If the transaction is approved, Anthem Blue Cross Blue Shield of Maine will be subject to premium taxes as other health insurance companies doing business in Maine.
    The Superintendent will be advised of the number of comments received and the points that have been made. Letters will become part of the record and will be distributed to all parties. We encourage you to send us e-mail by using the "send us e-mail" option found either at the top or on the left side of the Bureau's web pages. Our Web address is - MaineInsuranceReg.org
  2. How can I find out when the hearings are scheduled?
    This web-site will contain copies of all rulings and all notices of hearings. The Bureau has issued press releases to announce the date, time, and place of the hearings, so the information may also be carried in the newspapers or on the radio. Formal legal notices will also be place in newspapers of general circulation in the "Legal Notices" section of the papers.
  3. May I attend the hearings and any pre-hearing conferences on these transactions?
    All hearings before the Superintendent of the Bureau of Insurance are open to the public.
  4. Is the entire plan of conversion and the entire plan for acquisition and control available for public inspection?
    No, Blue Cross and Blue Shield and Anthem have asked that certain portions of the submissions be treated as confidential and not be made available to the public. This is not an unusual request in complex, insurance financial matters before the Bureau of Insurance or in proceedings before other governmental agencies.
    Maine law provides for certain documents to be treated as confidential. The Superintendent of the Bureau of Insurance and his attorneys will review the request for confidential treatment, review the documents and review Maine law regarding confidentiality standards and an order will be issued stating whether some or all of the documents which have been filed as confidential will be made available for public inspection.
    A portion of the filing is available for viewing on the Bureau of Insurance home page at MaineInsuranceReg.org. You may also view portions of the filing at the Portland, Lewiston, Auburn, and Bangor public libraries and at the Law Library in the state house building in Augusta. A more complete file at the Bureau of Insurance is also available for viewing. Only the file at the Bureau of Insurance will be updated with additional information as it is received throughout the process.
  5. Who is Associated Hospital Services? I see them referenced in some of the filings.
    Associated Hospital Services is the official corporate name of Blue Cross and Blue Shield of Maine.
  6. How Can I Participate in the Blue Cross/Anthem conversion and merger Process?

Public Comment

Members of the public are welcome to provide testimony at the public hearing on Saturday, April 8 in the Central Conference Room at the offices of the Bureau of Insurance 124 Northern Ave, Gardiner, Maine from 9:00 a.m. until 5:00 p.m.. Testimony may be either sworn or unsworn.

Sworn testimony is subject to cross-examination by the parties but only sworn testimony is considered as evidence that the Superintendent of Insurance may use as a basis for a decision.

Unsworn testimony at thepublic hearing is not subject to cross-examination. While unsworn testimony is not used as a basis for a decision, it does become part of the record of the proceeding. Written public comment is considered unsworn testimony unless it is notarized as sworn testimony. In addition, if you want notarized testimony to be treated as evidence, you must be available for cross-examination during the public hearing.