Florida Blue

Most Americans who hold individual health policies that don’t meet requirements under the Affordable Care Act for 2014 could get better plans with subsidies through the Health Insurance Marketplace, according to a consumer group.

About two-thirds of Floridians who hold such policies have incomes between 100 and 400 percent of the poverty level, the report from Families USA says. That means that if and when they check Healthcare.gov, they’ll find they qualify for tax credits that bring down the premium cost.

Florida Blue, the largest health insurer in the state, says it will reinstate 300,000 policies it was planning to cancel, the Fort Myers News-Press reports. Bowing to pressure, on Thursday President Barack Obama announced that individual policyholders who saw their insurance policies cancelled because they didn’t meet the standards under the Affordable Care Act could in fact keep their policies if the company was willing to offer them.

Saying "I get it -- I understand how upsetting it can be,"President Obama said today he will help Americans who have received notice that their individual policies are being canceled because they don't comply with the Affordable Care Act. 

(See live coverage here.)

He said he would allow insurers to extend policies that fail to meet the health law's requirements for 2014.

First, it was Florida's elected officials who went after President Obama's Affordable Care Act, filing suit against it and blocking it in any way they could. Now it's the private sector -- albeit unwittingly.

The data center host for Healthcare.gov, Verizon Terremark, has its world headquarters in Miami. It has gone down three or four times this week (accounts differ) -- most memorably while Health and Human Services Secretary Kathleen Sebelius was testifying before Congress on Wednesday.

Florida Blue’s cancellation of 300,000 individual health-insurance policies in the state has led many to accuse President Obama of deliberately misleading the public when he said that if people liked their insurance policies, they could keep them, the Fiscal Times reports.

U.S. Sen. Marco Rubio made the media talk shows on Sunday, discussing Obamacare and the recent government shutdown, the Tampa Bay Times reports.  Rubio stated on The O’Reilly Factor that Obamacare had caused 300,000 Floridians to lose their health insurance and owe the IRS money.  He also stated on Fox News Sunday that he didn't support the government shutdown.

Federal health officials have clarified the deadline people must meet under the individual mandate to buy health insurance under the Affordable Care Act, the Washington Post reports. Open enrollment on the new health insurance Marketplace runs through March 31, and so long as people buy a health plan by then, they won’t face a tax penalty for not having health insurance. It often takes a little time for coverage to kick in once someone enrolls in a plan. 

(UPDATE) Florida Blue, the newly adopted brand for the former Blue Cross and Blue Shield of Florida, is canceling 80 percent of its current individual policies because they don't jibe with the requirements under the Affordable Care Act that go into effect Jan. 1. The number affected is estimated to be 300,000.

Eve Edelheit / Tampa Bay Times

After saying it wouldn’t pay for round-the-clock nurses for the girl who was severely brain damaged last year after nearly drowning in the Erie Canal, Florida Blue now says it will, the Tampa Bay Times reports. The family of Selah Clanton, 9, received a call from Gov. Rick Scott about the insurer’s reversal, which came after former state Rep. Mike Fasano asked lawmakers to intervene on the girl’s behalf.

Elaine Litherland / Sarasota Herald-Tribune

As the Sarasota Herald-Tribune reports, the lump in Ron Kraemer’s chest turned out to be something rare and serious: soft-tissue sarcoma. But as a fitness instructor, he proved to be a more than formidable opponent, refusing to give up even when the surgeon had to remove 80 percent of his upper chest muscle, when his arm and hand doubled in size from lymphedema, when 35 sessions of radiation inflicted painful burns and even when his insurer refused to pay the bills. 

In a column in the South Florida Sun-Sentinel, Tony Fransetta outlines what he thinks Florida Blue is really trying to do with its reorganization. He writes that the surplus funds should go back to policyholders, not to a mutual insurance holding company the insurer wants to create.

Eve Edelheit / Tampa Bay Times

The family of a severely brain-damaged 9-year-old plans to fight a state ruling that will allow Florida Blue to stop paying for around the clock in-home nursing care for their daughter.  Selah Clanton, who spent eight weeks in a coma in 2005 after her stroller plunged into the Erie Canal, is now in a persistent vegetative state, according to the Tampa Bay Times.

Amid promises from Florida’s largest insurer that it won’t sell company stock to outsiders unless it absolutely has to, and after having a chat with Florida Blue lobbyist Paul Sanborn, state regulators approved Florida Blue’s request to reorganize, the Florida Times-Union reports.

In a video posted by the Florida Times-Union, Florida Blue CEO Pat Geraghty explains why it  would be good for Florida business if state officials accepted federal dollars for Medicaid expansion. Geraghty also described how Florida Blue is planning to serve more customers once Obamacare comes to Florida by creating partnerships and becoming a health care company, not just an insurance provider.

M. Spencer Green / AP

Florida Blue, the state’s largest insurer, has an inside track to a potentially lucrative market by entering a partnership with Spanish-language network Univision, Kaiser Health News and the Miami Herald report.

Palm Beach Post

Opponents urged state insurance regulators to reject Florida Blue’s request to transfer $1.6 billion of its $2.8 billion surplus to a for-profit stock company, the Palm Beach Post reports. The Florida Alliance for Retired Americans referenced recent articles about Florida Blue published by the Palm Beach Post, and said the excess funds means the insurer has been overcharging policyholders. The public still has 10 days to comment on the proposal. Florida Blue, a nonprofit, is the largest insurer in the state. 

State Reviews Florida Blue Plan as Watchdogs Question how Law Changed

Jul 25, 2013

Reprinted with permission from the Palm Beach Post

A proposed reorganization of the state’s largest health insurer comes before a state insurance hearing Thursday in Miami, but a watchdog group says it is disappointed by the handling of legislation Gov. Rick Scott signed June 7 that Florida Blue sought to help it expand after the change.

An amendment added on the Senate floor by state Sen. Joseph Abruzzo, D-Royal Palm Beach, passed with little debate and no staff analysis in that chamber before the vote, as far as Integrity Florida can see.

“Probably when that happens it is the result of some pretty shrewd lobbying efforts,” said Ben Wilcox, research director for Integrity Florida, a Tallahassee group that calls itself a nonpartisan, nonprofit research institute and government watchdog. “It’s disappointing the public wasn’t allowed to weigh in on it.”

Florida Blue wants to create stockholder-owned companies under a not-for-profit mutual insurance holding company. Corporate officers could gain from future stock deals, and company documents acknowledge proposed changes could pose a conflict between its board’s traditional duty to provide low-cost insurance to its 4 million policyholders and a new duty to do what’s best for shareholders, The Palm Beach Post reported Sunday. One analyst called the proposed corporate structure “bizarre.”

Florida Blue is the largest corporate donor to Scott’s Let’s Get to Work political committee, giving more than $937,000, and it ranked as the top contributor overall to Florida politicians and parties in the 2012 election cycle with $4.8 million. The insurer’s registered lobbyists include former Duval County Republican Chairman Mike Hightower, also the former Bush-Cheney chairman for the region.

Asked whether the governor was comfortable the amendment had received sufficient scrutiny, Scott spokesman John Tupps said, “You should check with the legislature on this.”

Tupps repeated an earlier statement saying Scott takes no position on Florida Blue’s reorganization and it is up to the state’s Office of Insurance Regulation, which is conducting the Miami hearing, to review the proposal. Policyholders must approve the plan as well.

The underlying bill Scott signed last month, SB 356, lets insurance companies that don’t issue stock insure municipal bonds. The amendment makes changes to state law that Florida Blue sought to help it with future mergers and acquisitions of not-for-profit insurance companies and health plans as well as stockholder-owned concerns, if its reorganization is approved.

As for the company’s application to reorganize itself, Office of Insurance Regulation General Counsel Belinda Miller said it “could have been filed in the same way that it actually is filed without any change in the law.”

Florida Blue spokesman Paul Kluding said, “The legislative amendments were not needed for purposes of the filing for the MIHC reorganization, but provide additional clarification and flexibility to address marketplace changes.”

Regarding scrutiny, he said, “The amendments passed unanimously in the House Regulatory Affairs Committee as well as the full House and Senate.” The House dropped a companion bill and passed the Senate version.

Abruzzo, who did not return a call for comment, withdrew a late-filed amendment in the Senate Commerce and Tourism commitee April 1 after asking Florida Blue lobbyist Paul Sanford to speak to the committee.

“I think there’s been some concern raised over this amendment, and I’m not quite sure what it is, but basically all this amendment does is allow mutual insurance holding companies to own a not-for-profit insurer,” Sanford said at the time.

Company officials said they plan no particular acquisitions or stock incentive plans for executives and insisted policyholder premiums and coverage won’t change as a result of the reorganization.

Florida Blue paid at least 14 officers and directors more than $1 million each in 2012 at the non-profit insurer based in Jacksonville, with more than half of those receiving a raise of at least $500,000 from 2011, documents obtained by The Post show.

Non-Profit Pay Tops $1M for At Least 14 at Florida Blue

Jul 25, 2013

Reprinted with permission from the Palm Beach Post

For all the talk about lower costs and efficiency in a new era for health care, compensation for at least 14 officers and directors at non-profit insurer Florida Blue has rocketed past the $1 million mark, documents obtained by The Palm Beach Post show.

Topping the list: Chairman and CEO Patrick Geraghty’s pay of $6.8 million in 2012.

Florida Blue directors were paid at an average of more than $180,000, more than double the pay of directors at Blue Cross in Massachasetts that touched off a public firestorm there over lavish compensation for part-time work in a charitable organization. Director pay in Massachusetts was suspended entirely in 2011 and reintroduced in March at a lower amount, less than $55,000.

More money-making opportunities could lie ahead. Florida regulators will convene a hearing Thursday in Miami to consider a reorganization plan for Florida Blue that could let officers and directors gain from future stock ventures.

Many don’t seem to be doing too badly already. Four of six board members of subsidiary OptaComp received at least $1 million in 2012 compensation. That money included “long-term incentive plan awards” and retirement contibutions, records submitted by the company to state regulators show.

OptaComp is the trade name for CompOptions, which has a five-year, $31 million contract to process the State of Florida’s worker’s compensation claims and provide case management services.

The four OptaComp board members are Florida Blue executives who serve that role as part of their paid duties, company spokesman Paul Kluding said. They received no additional compensation for their service on that board, he said.

Overall, Florida Blue’s executive compensation takes into account the size and complexity of a $9 billion statewide company, Kluding said.

“To increase the affordability of our products and services, our executives have led initiatives that have reduced costs for our members by over $2 billion over the past five years,” he said. “This is significant because approximately 85 percent of every premium dollar is used to reimburse doctors, hospitals, pharmacies and other care providers on behalf of our members. Approximately 0.35 percent of any premium dollar collected is used to pay our executives.”

In addition, he said it is not fair to compare Florida to Massachusetts because of the “fundamental differences in plan sizes, scope and markets.”

At the time of the controversy, though, Blue Cross in Massachusetts had larger revenues than Florida Blue, about $13 billion, reports show.

The fuss in Massachusetts, inflamed by an executive’s $11 million severance package, was such that the state’s attorney general launched an investigation.

“The board really wanted to move the discussion back to talking about health care affordability, and this issue really had become too much of a distraction,” Massachusetts Blue Cross CEO Andrew Dreyfus explained about the suspended director pay in 2011. “They really wanted to send a message that there’s a new era of Blue Cross and we are going to be more modest in our compensation practices.”

For its part, Florida Blue has “been leading the way in changing the way health care is delivered by working with providers to lower costs and increase quality of care,” Jason Altmire, the company’s senior vice president of public policy, government and community affairs, said in May.

But if there’s a new world of belt-tightening, it’s easy to get other ideas from a glimpse at the pay window of Jacksonville-based Florida Blue.

Total compensation jumped by half a million dollars or more between 2011 and 2012 for more than half the officers and directors who were paid at least $1 million.

In 2010, as CEO and trustee of Blue Cross and Blue Shield of Minnesota, Geraghty had earned significantly less, $1.5 million, according to The Minneapolis Star Tribune. The newspaper called him the highest-paid non-profit leader in that state.

Florida Blue handles a significant amount of government work. Through subsidiaries First Coast Service Options and Novitas Solutions, it is the Medicare claims administrator for Florida, Puerto Rico and the Virgin Islands plus Pennsylvania, New Jersey, Deleware, Maryland and the District of Columbia.

Florida Blue on Hotseat

Jul 25, 2013
Palm Beach Post

Reprinted with permission from the Palm Beach Post

More on Florida Blue from The Post:

Non-profit executives could cash in on future stock deals under a reorganization proposed by the state’s largest health insurer, Florida Blue.

Company filings acknowledge the changes could pose a new conflict with its mission of providing low-cost insurance to more than 4 million policyholders: the duty to do what’s best for shareholders

The plan has received scant public attention ahead of a hearing before state insurance officials Thursday in Miami. If approved by regulators and policyholders, it would set in motion fundamental changes as soon as Jan. 1 at Blue Cross and Blue Shield of Florida, doing business since last year as Florida Blue. With roots that go back to 1944, it is the state’s oldest health insurer.

In state filings, the company says it would create a stock insurance company under a not-for-profit mutual holding company. The structure would ensure the company maintains its mission “to offer affordable health care products and services to its members,” a spokesman said, insisting premiums and coverage won’t change as a result of the reorganization. The move would also enable it to engage in mergers and acquisitions while keeping certain tax breaks and other advantages of a not-for-profit enterprise.

Not everyone sees the wisdom. One analyst who reviewed the application at the request of The Palm Beach Post called the proposal “Nirvana for management” but one that raises serious questions about whether it is good for policyholders and the public.

“This is a very bizarre structure,” said Brendan Bridgeland, director of the Center for Insurance Research, a Cambridge, Mass., nonprofit group that says it doesn’t take money from insurers. “You can’t just start running a stock company at a non-profit mutual holding company and start giving money to executives because charitable assets are going to vanish. It’s a huge problem.”

Bridgeland serves as consumer liaison for the National Association of Insurance Commissioners and sits on a consumer advisory committee to the Interstate Insurance Product Regulation Commission. He questions whether the plan takes proper account of the public and taxpayer interest in Florida Blue. As a non-profit venture, he said, it has enjoyed tax breaks and other advantages associated with that status.

Florida Blue is not planning to sell any stock, spokesman Paul Kluding said. Applications like the one it filed with the state “require the disclosure of risks even if there is a remote chance of it occurring and despite the fact that the company has made it clear that it will not engage in that activity,” he said.

Still, the company’s own documents make plain the reorganization could eventually pit the interests of policyholders against shareholders.

“Prior to the reorganization, the board has a duty to act in the best interests of Florida Blue and its members,” the company’s filing says. Afterward, “the board of directors of Florida Blue will have a duty to act in the best interests of Florida Blue and its shareholders, including any third parties that may acquire shares in the future.”

A lot of money is at stake at a company with revenues of $8.8 billion in 2012 that could grow to $12.7 billion by 2016, its filings project. Even without the new structure, at least 14 officers and directors received $1 million or more in total compensation from Florida Blue last year, documents obtained in a records request by The Post show. More than half saw their compensation grow by at least half a million dollars from 2011.

“We will not create a stock incentive program for executives or employees as a result of this transaction,” Kluding said.

State law allows officers and directors to take a 5 percent stake in certain stock holdings that can be created under the new structure.

Even if they don’t do it with this transaction, executives may well have incentives to do so in the future, cautioned Palm Beach accountant Richard Rampell.

One such incentive: to build up the value of shares and cash in, Rampell said.

A minority of Florida Blue’s shares could be sold or bartered for cash value, the disclosures state, and policyholders won’t have any say in that.

“Initially, members as a group will own 100 percent of Florida Blue through the 100 percent ownership of Florida Blue by Mutual Holdings,” the company’s filing says. “However, in the future, Florida Blue may issue its shares to other outside investors.”

The company’s disclosure goes on: “The members of Mutual Holdings shall have no right to vote upon the issuance of additional shares of capital stock of Florida Blue or any intermediate holding company in connection with an offering of such stock.”

It’s not clear how many groups or politicians in Florida are likely to ask a lot of questions about the plan. Florida Blue ranks as the leading single most generous corporate donor to state political officials generally ($4.8 million in the 2012 election cycle) and to Gov. Rick Scott’s Let’s Get to Work political committee in particular ($937,500). That doesn’t include about $2 million spent on lobbying since 2007, according to state records.

Scott takes no position on the reorganization, a spokesman said.

“As the process continues, the Office of Insurance Regulation must do its due diligence in working with the public and many stakeholders in fully vetting this proposal and protect the interests of Floridians,” said deputy communications director Frank Collins.

Florida CHAIN, a statewide advocacy group based in Jupiter that has spoken out for greater access to health care, has no plans to attend Thursday’s public hearing, representatives said.

“We are are not working on this particular issue at this time,” said spokeswoman Leah Barber-Heinz. “We will pass on commenting and will not be attending the hearing.”

Florida Blue is identified as a corporate donor and sponsor on Florida CHAIN’s website, and a company employee sits on the organization’s board, group officials acknowledged. A Florida CHAIN officer noted the group has publicly disagreed with the company’s position on some issues. She said it is inappropriate to infer her group is not taking an interest in Blue’s reorganization for any reason other than it is working exhaustively on such other issues as the upcoming open enrollment phase of the Affordable Care Act.

In its state filings, Florida Blue acknowledged that its board had discussed a number of concerns at its May 28 meeting, though it ultimately approved the plan.

Florida Blue received an outside “fairness opinion,” which declared the new corporate structure acceptably fair for policyholders. J.P. Morgan Securities Inc. provided the opinion — paid for by Florida Blue.

The state’s Office of Insurance Regulation said it will obtain its own fairness opinion, but it will be issued after the Thursday hearing.

Across the country, various Blue Cross companies have changed their structures or merged over the years, but states have not always rubber-stamped a change when they didn’t see it as being in the public interest.

Take Kansas, which blocked a Blue Cross merger with a for-profit company more than a decade ago. The state’s insurance commissioner at the time dug into the facts of the case, decided the move would raise premiums for many customers and was not worthwhile. The commissioner was Kathleen Sebelius, now the U.S. Health and Human Services secretary.

Florida Insurance Consumer Advocate Robin Westcott is scheduled to speak for 15 minutes at Thursday’s hearing.

“My questions for Blue Cross will be directed toward reviewing any advantages that the company and its executives may be able to leverage in the future as a result of the transaction that are not consistent with good public policy,” Westcott said. “I would like to see full explanations regarding any depletion of surplus for the new stock insurance company and the effect of this transaction in complying with the new Federal Health Care Law.”

Insurers have to give money back to consumers when they spent too much on administrative costs, pay or profits as opposed to medical care, according to the Affordable Care Act. The law says they must spend at least 85 percent on medical care in big group plans and 80 percent in smaller plans

A Florida Blue spokesman denied the restructuring represented any kind of attempt to shift administrative costs or executive compensation within the new corporate structure to avoid having to give money back.

“No, this reorganization will not change the rebates we are required to pay customers under the Affordable Care Act,” Kluding said.

In Florida, more than 1.2 million customers received $123 million in total rebates averaging $168 per family in 2012, according to federal officials. Another $54 million in rebates has come to Florida customers this year.

Consumer groups say there’s plenty here that deserves scrutiny.

“It’s a shame it hasn’t gotten more public attention,” said Susan Sherry, deputy director of Community Analyst, a national nonprofit consumer advocacy organization based in Boston. “The public needs an independent analysis. Without that, it’s hard for people to have a voice.”

Florida Blue, one of the most generous donors to state political campaigns, usually gets what it wants. In the case of a bill that Gov. Rick Scott signed on Friday, its chief lobbyist, Paul Sanford, actually wrote it, according to the Florida Times-Union.

This is the time in a legislative session when health-care interests try to get bills passed or amendments tacked onto must-pass bills so that they will benefit financially.


For insurers and the agents who sell their products, this is a time of great uncertainty, of racing to prepare for something that remains ill-defined: the Patient Protection and Affordable Care Act. By October, if they want to be available for sales to individuals and small firms, insurers must be prepared to market themselves on an online website, even as they continue to market to large employers. Agents hope to figure out a role for themselves where they can still make a living.

Diagnostic Clinic, with 80 doctors that serve more than 90,000 patients, will be purchased by the state’s biggest insurer.