Byline: Price Colman Rocky Mountain News Staff Writer
Colorado's top Blue Cross officials won't get thousands of dollars in bonuses for converting the insurer into a for-profit company, according to an agreement worked out with state regulators.
By addressing that and other issues raised by Colorado Insurance Commissioner Jack Ehnes, Blue Cross and Blue Shield of Colorado eliminated a key stumbling block in efforts to convert the non-profit insurer to a publicly traded, for-profit firm.
After Ehnes learned earlier this week of the bonus plan, which conflicts with legislation needed for the conversion, he wrote a stern letter to Blues chief executive David Kikumoto declaring regulators would turn down any plan that included bonuses linked to the change.
Converting to for-profit status is crucial for the Blues to obtain the cash they need to compete in the cutthroat managed-care insurance arena, company officials contend.
``The board passed a resolution not just to delete the offending (bonus) paragraph, but to adhere to the language in SB 100,'' said Ehnes.
In addition, the insurer responded to all of Ehnes' requests for documents involving board and committee meetings on the bonus plan.
``Unquestionably, they provided all that information,'' Ehnes said.
In a separate case, New Mexico Blues plans - which like Colorado and Nevada plans are managed by Denver-based Rocky Mountain Health Care Corp. - apparently forestalled potential civil and criminal action by regulators there.
``We have complied with everything that Commissioner Ehnes asked us to comply with and done everything that the insurance superintendent in Santa Fe wanted us to do,'' said Blues spokesman Carl Miller.
New Mexico insurance superintendent Chris Krahling had given the New Mexico Blues until Friday to address a variety of regulatory issues. Krahling cited improper financial guarantees between the different New Mexico Blues, removing money from the state, failing to maintain key records in the state and failing to obtain regulatory approval for transactions among various Blues companies.
``Some of the issues require additional work and additional attention,'' said Krahling. ``However, the board has spelled out how they're going to address those issues to our satisfaction for the time being.''
The Colorado Blues face other challenges in making the switch to for-profit.
The legislation - Senate Bill 100 - that would enable the Blues and other non-profits to switch to for-profit, is headed for the Colorado House's Health Environment Welfare and Institutions committee for a hearing Monday.
While the bill passed overwhelmingly in the Senate, it could face a tougher time in the House as lobbying efforts on both sides are heating up.
House Majority Leader Tim Foster, R-Grand Junction, is likely to feel a good deal of that heat. He is sponsoring four amendments - all of which the Blues oppose - that consumer activists consider crucial.
The amendments include a strict definition of how the non-profit is valued, eliminating any overlaps between boards of the for-profit and new non-profit foundation, strict limits on the foundation's lobbying and political campaigning powers and closing a legal back door that could give the Blues an out if the bill fails.
``We'll see what their lobbying effort is,'' said Foster. ``No one from the Blues has come to my office and said, `Here's what we're trying to do, here's how we're trying to allay concerns.' ''
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Colorado Insurance Commissioner Jack Ehnes has won compliance on a number of issues from Blue Cross and Blue Shield of Colorado in the company's efforts to convert to for-profit status. By Steve Groer / Rocky Mountain News.
