Pediatrician, hospital chief to rebut criticism of WellPoint

Witnesses at Md. hearing on CareFirst to relate improved dealings

January 23, 2003|By M. William Salganik | M. William Salganik,SUN STAFF

WellPoint Health Networks Inc. - once known for contentious relationships with hospitals and doctors - is working much more collaboratively now, a pediatrician and a hospital executive said in pre-filed testimony released yesterday.

The statements were prepared for hearings over the next two weeks before Maryland Insurance Commissioner Steven B. Larsen, who is to rule next month on whether it is in the public interest for WellPoint to buy CareFirst BlueCross BlueShield for $1.37 billion. As part of the deal, CareFirst would convert to for-profit operation.

In hearings over seven days beginning Tuesday, Larsen will hear from his own consultants, who have studied aspects of the transaction including the likely impact on price and availability of insurance policies, and the process CareFirst's board followed in negotiating the sale.

CareFirst and WellPoint will present a lawyer and an investment banker to defend the board process. Testimony from five other witnesses, filed with the Maryland Insurance Administration and released yesterday, gives a preview of WellPoint's tack in responding to concerns on consumer impact.

In particular, the hospital executive and the doctor will be countering criticism by one of Larsen's consultants. The Delmarva Foundation for Medical Care, of Easton, told Larsen in a report released Tuesday that "WellPoint is a tough negotiator with both physician and hospital providers."

In a survey by an employer group, Delmarva said, 46 percent of hospitals rated WellPoint's Blue Cross of California the worst health plan in the state.

Lloyd Dean, president and chief executive of Catholic Healthcare West, said in his prepared testimony that his 42-hospital system had resolved its differences and formed a "strategic partnership" in which WellPoint was providing money and assistance to help with clinical information, nurse recruitment and claims processing.

In June 2000, Catholic Healthcare had sued Blue Cross of California, saying the insurer owed it $50 million for claims it had refused to pay, in violation of its contract and state law. WellPoint denied the allegations in the suit, which was dropped when the two sides resolved their differences.

Dr. Marvin B.H. Kanter, a pediatrician and chief executive officer of Progressive Healthcare Systems, a company that provides management services to physician practices, also said Blue Cross of California had softened its dealings with providers.

"In a market-based system there are inevitably tensions between payors and health professionals," Kanter said in his prepared testimony.

"I like to joke that the eight health plans we contract with take turns being the worst," he continued. "It's been several years since [Blue Cross of California] has been the worst. In fact, the worst plan we have to deal with right now happens to be a nonprofit plan."

Leonard D. Schaeffer, WellPoint's CEO, said in his testimony that Blue Cross of California's membership had more than doubled, to 6.9 million, since it converted to for-profit operation in 1996.

"The California market punishes organizations that are not responsive to consumer demands," he said. "Customers choose BCC because we have designed products and services to meet their needs."

Membership has also increased in Georgia and Missouri since WellPoint bought Blue Cross plans there, Schaeffer said. Employment has increased in the Georgia plan and remained steady in Missouri's.

John Monahan, WellPoint's senior vice president for state-sponsored programs, said his company has 1.7 million Medicaid members, more than any other insurer in the country. CareFirst has been criticized for dropping out of Maryland's Medicaid program.

Larsen's final set of hearings is to begin Tuesday with testimony on CareFirst's contract dispute with Children's National Medical Center in Washington.

The hearings will continue each weekday through Feb. 5, at the Baltimore Inner Harbor Marriott Hotel, beginning each day at 9:30 a.m.

The last day will include an opportunity for public comment.

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