Blues conversions hitting speed bumps

A move in North Carolina, along with other failures, makes some wonder if the parade of Blues plans seeking for-profit status will slow.

By Robert Kazel, AMNews staff. July 28, 2003.

BlueCross BlueShield of North Carolina has thrown up its corporate hands in frustration and abandoned a 19-month effort to become a for-profit company. The abrupt withdrawal of the proposal raises the question of whether Blues plans in general will shy away from conversion in the future, given the apparently mounting obstacles.

North Carolina Blues President and CEO Bob Greczyn said July 8 that the decision not to seek conversion was necessary to protect the plan from state officials, whom he said might try to impose untenable restrictions and oversight on the plan. The plan also needed to be safeguarded from the eyes of rival insurers, who might gain access to confidential Blue Cross financial data during the conversion application process, he said.

"You don't want to give competitors your playbook," Greczyn said at a news conference. The Blues plan had spent $18 million on conversion.

The North Carolina Medical Society had been highly skeptical, saying it opposed the proposal unless the Blues plan provided proof that conversion wouldn't cause rates to rise or cause the plan to be less responsive to doctors' needs. Doctors never were persuaded that the company, despite assertions, fully intended to remain independent of ownership of a national managed care firm and to remain focused on its role as a local insurer after conversion, said society general counsel Stephen Keene.

The Blues plan dropped its conversion attempt when it realized it could not refute mounting evidence that being for-profit would have a negative impact on patients, said Peter Kolbe, general counsel for the North Carolina Dept. of Insurance. A consultant's report said premiums could rise up to $600 million within five years, causing thousands to become uninsured.