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Maine.gov > PFR Home > Insurance Regulation> Administrative & Enforcement Actions > Document 571 : INS 99-14 : Hearing Decision
DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
BUREAU OF INSURANCE
On March 10, 2000, Anthem filed objections to Intervenors Designations of Issues ("Anthems Objections"). Anthem set forth two basic objections, namely that certain of the issues identified in the Maine Medical Associations ("MMA"), MHA, Inc.s ("MHA") and Consumers for Affordable Healthcare Coalitions ("CAHC") either (1) did not fall within the relevant statutory criteria, or (2) were so vague that it was impossible to determine what issues that intervenor would not be addressing at the hearing. (See Order on Applicants Request to Compel Responses to Discovery Requests at 1: "[I]n recognition of the need for information prior to the hearing as to the issues to be addressed, the Superintendent hereby ORDERS as follows: . . . The designation shall provide a detailed summary of the specific issues which each intervenor will address. The issues identified must fall within the general standards set forth in the Notice of Hearing") (emphasis added).
BCBSME joined in Anthems Objections, as well as filed a supplemental response pointing out the additional reasons why the Applicants have no burden to prove that BCBSME could not survive in the absence of this transactions.
On March 16 the MHA, and on March 17 the MMA and CAHC, filed responses to Anthems Objections. For the reasons set forth below, Anthem respectfully requests that the Superintendent sustain its objections. In order to ensure that the hearing in this matter will maintain the proper statutory focus, Anthem requests that the Superintendent issue an order confining the issues to only those that are properly within the scope of the process.
For ease of review, Anthem sets forth below a summary of the intervenors arguments, and Anthems response.
As previously noted, the Applicants have no duty to prove that BCBSME cannot survive unless this transaction is approved. At the March 17 conference of counsel, all of the intervenor representatives present, including representatives from MMA and MHA, conceded that Applicants have no such burden.
Notwithstanding this concession, however, the MMA continues to argue the issue is relevant. (MMA Response at 2.) If BCBSME were facing imminent financial failure, that would be informative to the Superintendent as he balances the potential prejudice or unfairness of the transaction to policyholders (e.g., the Superintendent would be weighing any "prejudice" from the transaction against the prospect that, without the transaction, BCBSME would fail).
In its Objections, Anthem pointed out that Anthem has no statutory burden to integrate BCBSME into a region, and no statutory obligation to prove that "integration of Blue Cross plans in Connecticut, New Hampshire and Maine would lead to administrative efficiencies or superior operations."
Similarly, certain aspects of BCBSMEs financial results are, of course, relevant to other issues (e.g., to the valuation of the Companys assets). Anthems own financial strength is relevant to certain issues e.g., Anthems capital surplus and continued positive financial results, compared to BCBSMEs, are relevant to policyholder and creditor interests, because Anthem is obviously in a much better position to withstand poor financial results than BCBSME, to keep the to-be-formed Anthem Health Plans of Maine well-capitalized, and to assist in returning the Company to profitability.
These two issues address the same point.
Anthem believes that administrative efficiencies and superior operations will result from the transaction, and acknowledges that the existence and benefits of regional support and administrative efficiencies may be relevant evidence to consideration of some express statutory criteria, but it disagrees that there is any distinct statutory standard that must be satisfied with respect to those factors.
Will BCBSME be more financially sound if this transaction is approved? We believe it will. Are there administrative and functional efficiencies to be gained from regional coordination? We believe there are. But that does not change the fact that the relevant statutes do not impose any obligation to integrate regionally or to prove with any precision the level of administrative and functional savings that should result from that integration.
As reflected in the Anthem East Executive Integration Steering Committee minutes, Anthems integration plans are a work in progress and the Superintendent, and others, can see from those documents, and will hear at the hearing, that Anthem is taking the steps it deems appropriate to plan for the acquisition of BCBSME and how the organization will fit into the Anthem family of Blues. The MMAs suggestion that Anthem must "prove" more should be rejected.
In its Objections, Anthem pointed out that it is assuming all of the provider contracts and, accordingly, BCBSMEs contractual obligations will be unaffected. That should end the analysis of the only potentially applicable statutory criterion. Anything more is an improper attempt by the MMA to impose conditions on future contracts that are nowhere required by statute.
The MMA responds that any "new" HMO would have to "submit proposed forms of provider contracts for review by the Superintendent." (Id. at 3.) But Anthem Health Plans of Maine is assuming all of BCBSMEs existing provider contracts and the Superintendent is aware of all of the contractual provisions of the current BCBSME contracts because they are on file with the Bureau. BCBSME has no duty to file potential changes to those contracts that it may make in the future and no such burden should be placed on Anthem to do so in this transaction.
This "issue" is best characterized as a request that the Superintendent permit the MMA to tie approval of the proposed transaction to future provider contract negotiations. There is no such statutory requirement. The issue should be stricken.
In its Objections, Anthem pointed out that, for many of the same reasons articulated above concerning the MMAs "Provider Agreements" issue, this issue does not belong in this proceeding.
Anthem has repeatedly stated that it is assuming the present provider agreements and that, when those agreements come to an end, the Company will negotiate in good faith with the providers to enter into future contracts. That is all the "guarantee" that the providers now have from BCBSME, and that is all that should be required of Anthem. But more importantly, nothing more is required in any of the relevant statutory criteria.
The Superintendent has regulatory oversight to address the relevant statutory inquiries and approve or disapprove the present transaction. The Superintendent also has ongoing oversight authority to review future actions taken by Anthem Health Plans of Maine, or any other Maine insurer. These are, and should remain, separate functions. Anthem respectfully requests that the Superintendent limit the hearing in this matter to the issues that will result from the current, proposed transaction and leave for another day the future actions that Anthem Health Plans of Maine may take.
In its Objections, Anthem noted that the MMAs wording of the payments to providers issue was unclear. In its response, the MMA described the issues this way:
(Id. at 4.) Anthem still does not fully understand this issue. There is no statutory criteria that requires Anthem to commit to providing capital in excess of the statutory and BCBSA requirements. Likewise, there are no provisions requiring Anthem (or any other insurer) to provide a bond, security, or other guarantee for payment of provider services.
In its response to Anthems Objections, the MMA combined its designation of three issues (Payments to Providers, Access to Capital, and Transfer of Capital) into one response. For the Superintendents convenience, Anthem herein sets forth herein each of the designated issues.
Moreover, the practical implications of these issues are clear. It is illogical to suggest that the Superintendent (1) should require capital to be infused into Maine from Anthem (presumably from subsidiaries in other states), while at the same time (2) prohibiting any transfer of capital from Anthem Health Plans of Maine, Inc. to its parent company (and hence to its other subsidiaries).
These issue are not within the relevant statutory inquiries and should be stricken.
* * * *
In its conclusion, the MMA argues that "[e]fforts to eliminate consideration of the issues [designated by MMA] before the presentation of evidence and closing arguments is inappropriate." (Id. at 5.)
But now is precisely the time that the scope of the hearing should be determined before the hearing, before the intervenors go through the expense and effort of preparing prefiled testimony, and before the parties are forced to spend valuable hearing time addressing issues that are not within any of the relevant statutory inquiries.
The proposed transaction is complicated, there are many relevant statutory inquiries and, accordingly, much pertinent documentary and testimonial evidence for the Superintendent to consider at the hearing. Although the providers undoubtedly would like to obtain future contract concessions from Anthem by using approval of this transaction as leverage, that is not the purpose of this proceeding.
B. MHA, Inc.
In its response to Anthems Objections, the MHA makes several introductory arguments. First, MHA requests that the Superintendent reject the "procedurally rigid approach" that Anthem and BCBSME have suggested in their objections. (MHA Response at 2.) But requesting compliance with the Superintendents designation order and limiting the hearing to topics that are within the statutory criteria is not "procedurally rigid." Rather, these steps need to be taken to keep the focus of the hearing within the scope of the Superintendents statutorily-mandated review.
The MHA next suggests that "the applicants have an obligation to participate constructively in a thorough consideration of the appropriate and legitimate public policy questions that MHA and other intervenors have raised." (Id.) Anthem agrees that it has the obligation to participate in the "appropriate and legitimate" issues in this proceeding. But the "appropriate and legitimate" issues in this proceeding are those set forth in the relevant statutory criteria. Anthem has participated constructively in that legitimate process by responding to more than 300 multi-part information requests. Anthems Objections seek to further this process by focusing the hearing on those same relevant criteria.
The Applicants burdens in this transactions are set forth in Title 24-A; Anthem and BCBSME have been working toward satisfying those burdens for the seven months that this transaction has been before the Superintendent; and the MHA cannot bring issues into this proceeding that are otherwise irrelevant simply by saying that this is a "significant" transaction.
Finally, the MHA appears to confuse the Superintendents order granting them intervention, with the ability to designate whatever issues are important to them. Being granted status as an intervenor does not create the right to alter the relevant statutory inquiries.
Each of the MHAs specific responses to Anthems Objections is discussed in turn.
Require Anthem Parent to Guarantee Satisfactory Performance of All insurance and provider contracts and other obligations of Anthem Blue Cross Blue Shield.
Please see Anthems response to MMAs issue regarding provider agreements. The relevant statutory criterion is whether the transaction will adversely affect BCBSMEs contractual obligations. Anthem Health Plans of Maine is assuming all of those obligations.
The criteria cited by the MHA reflect no further obligation. For example, Superintendent Criterion 4 inquires whether Anthem Health Plans of Maine has proposed plans to make changes that would be unfair or prejudicial to "policyholders or enrollees." The MHA is neither.
As a catchall, the MHA suggests that even if their issues are not within the relevant statutes, the Superintendent somehow has the authority to "adopt rules" in this proceeding beyond those contemplated in Title 24-A. This is incorrect. The Superintendent has authority to adopt rules in a rulemaking proceeding. This proceeding, on the other hand, involves a transaction for which the Legislature has developed very specific set of statutory criteria and procedures for approval.
The MHA also states that this transaction is "worthy of several additional examinations beyond those the Insurance Code routinely applies to health insurers." (Id. at 6.) As with the MMAs inference that the inquiries in Title 24-A are meant only for insignificant transactions, the MHAs assertion that this transaction warrants the Superintendent developing "special" criteria is without legal basis.
Finally, the MHA asserts that the Superintendent should take into account other "adverse experiences of Maine hospitals at the hands of other HMOs." (Id. at 7.) There is no such statutory requirement.
Prohibit or Limit Anthem Ability to Upstream or Transfer Maine Resources to other States.
Please see Anthems response to MMAs issue regarding capital transfers. MHA suggests that "it is fit and proper for the Superintendent to consider whether there ought to be additional constraints on the local Anthem entitys ability to transfer or upstream Maine-derived funds to its parent . . . ." (Id. at 8-9.) It would be wholly inappropriate to place "additional constraints" on Anthem beyond those that govern every other insurer in Maine, particularly when the logical implications of restricting capital transfers are considered.
Require Anthem to Continue Distinct Contracts with Distinct Providers.
In its Objections, Anthem pointed out that this issue appears to be designed to gain concessions in this proceeding concerning future provider contracts. The providers do not currently have a guarantee concerning future contract terms with BCBSME, and they are not entitled to such a guarantee under the statutory criteria relevant to this proceeding. The Superintendents Criteria cited by the MHA in its response are not to the contrary. Rather, they focus on potential prejudice to policyholders or enrollees. MHA also cites Superintendent Criteria nos. 23 and 24, dealing with the proposed bulk reinsurance agreement and BCBSMEs plan of voluntary dissolution. Neither supports the MHAs contention that it is entitled to turn this proceeding into a session for negotiating future provider contract terms.
Require Anthem to Continue Certain Other Provider Contracting Practices of BCBSME.
This issue is not related to any relevant statutory inquiry. The MHA further suggests that the Superintendent condition his approval on Anthems agreeing in essence to extend the pre-existing termination dates for the provider contracts for three years from the date of the transaction. The MHA members have no such guarantee even from BCBSME. For the reasons set forth above, it would be inappropriate to attempt to tie approval of this transaction to future contract concessions for the members of the MHA.
Attorneys for Anthem Insurance Companies, Inc.
CERTIFICATE OF SERVICE
The undersigned hereby certifies that on March 21, 2000 a copy of Anthem Insurance Companies, Inc.s Response to Intervenors Oppositions to Objections to Intervenors Designations of Issues was served by United States mail, first class postage prepaid, email, or, where indicated, by hand delivery, on each of the persons listed below.
Robert S. Frank, Esq.
Harvey & Frank
Two City Center
P.O. Box 126
Portland, Maine 04112
(Blue Cross/Blue Shield of Maine)
Judith Chamberlain, Esq.
State of Maine
Department of the Attorney General
6 State House Station
Augusta, Maine 04333-0006
(Bureau of Insurance)
William H. Laubenstein, Esq.
State of Maine
Department of the Attorney General
6 State House Station
Augusta, Maine 04333-0006
(Office of the Attorney General)
Joseph P. Ditre, Esq.
Consumer Health Law Program
One Weston Court, Level One
P.O. Box 2490
Augusta, Maine 04338-2490
(Consumers for Affordable Health Care Foundation/Coalition)
Michele M. Garvin, Esq.
Ropes & Gray
One International Place
Boston, Massachusetts 02110-2624
(Central Maine Healthcare Corporation; Central Maine Partners Health Plan)
Robert I. Goldman
Maine Council of Senior Citizens
27 Bowery Beach Road
Cape Elizabeth, Maine 04107
(Maine Council of Senior Citizens)
Executive Director of the Maine Ambulatory Care Coalition
P.O. Box 390
Manchester, Maine 04351
(Sacopee Valley Health Center, Regional Medical Center at Lubec, Eastport Health Care, Inc., and the Maine Ambulatory Care Coalition)
Maine Peoples Alliance
192 State Street
Portland, Maine 04101
(Maine Peoples Alliance)
Gordon H. Smith, Esq.
Maine Medical Association
30 Association Drive
P.O. Box 190
Manchester, Maine 04351
(Thomas D. Hayward, M.D.,
Maroulla S. Gleaton, M.D.,
And the Maine Medical Association)
Donald E. Quigley, Esq.
465 Congress Street, Suite 600
Portland, Maine 04101-3537
(Maine Medical Center)
Sandra L. Parker, Esq.
John Doyle, Jr., Esq.
Attorneys for MHA, Inc.
150 Capitol Street
Augusta, Maine 04330
Kellie P. Miller, M.S.
Maine Osteopathic Association
693 Western Avenue
Manchester, Maine 04351
(Maine Osteopathic Association)
DATED: March 21, 2000
James B. Zimpritch, Esq.
Jeffrey M. White, Esq.
Catherine R. Connors, Esq.
Portland, Maine 04101
Attorneys for Anthem Insurance Companies, Inc
Last Updated: January 21, 2014
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