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California: Blue Cross payment might violate agreement

Managed Care Weekly Advisor, May 30, 2007

A $950 million payment by Blue Cross of California to healthcare giant WellPoint, Inc. is under scrutiny by state investigators, who are investigating whether the payment violates an agreement to keep premiums down and maintain quality healthcare benefits. Officials say the payment made to the Indianapolis-based healthcare company is far in excess of the $141 million maximum that should have been taken out of California.

The California Department of Managed Healthcare is considering expanding its probe in search of other potential violations of a three-year agreement, and could order WellPoint to return any payments to policy holders that were taken improperly. Blue Cross paid dividends of $537.5 million in 2006, $518 million in 2005, and $350 million in 2004, but regulators are not yet investigating these earlier dividends.

Click here to read about the investigation.