An Open Letter From Regence

OPINION – November 22, 2011 -- Recent articles and blog postings have indicated some questions and confusion regarding our structure and recent internal capital movement. I hope the following will help clarify.

For many years, Regence has been structured as a nonprofit holding company system. This means that none of our capital is paid out to shareholders, but instead stays within the holding company system to grow and improve the business and to provide value to our members and the communities we serve.

Regence is unusual in that it is a nonprofit entity but nonetheless is fully taxed. This is in contrast to many of our nonprofit competitors (Providence, ODS, PacificSource, and Kaiser, for example) who are nonprofit and are exempt from many taxes.

There was an internal distribution of capital from BlueCross BlueShield of Oregon to the Regence holding company late last year. This is called an “ordinary distribution” under Oregon law.

There are limitations on an insurer’s ability to make such distributions to ensure that the carrier is maintaining safe and adequate capital levels. Such internal distributions are not uncommon, as one commenter pointed out on your site, citing other Oregon nonprofit insurers who make such distributions.

This capital remains within our nonprofit holding company system. It did not “leave” the system and, consistent with our nonprofit structure, it did not go to shareholders or outside entities.

In fact, these funds will be invested to develop and grow new and different products and services that will serve our members. We remain committed to improving the health and healthcare of people throughout the communities we serve, and will continue to seek out new and innovative ways of doing so, recognizing that some of these, as we’ve already seen, will not entail traditional health insurance offerings.

We have always sought to invest wisely the assets of our company. We do this to provide financial stability and to be good stewards of our assets. As a nonprofit entity, we do not have ready access to external capital sources. Instead, we must generate capital internally for such investments. As always, we remain committed to the health and wellness of our members and communities over the long term.

Georganne Benjamin is the Regence Assistant Director of Strategic Communications.

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Comments

How about the $1 million+ Regence invested in the Aspen Institute Health Stewardship Project. Shameless self promotion for emperor Ganz.

*rolls eyes* Same ole propaganda I heard during my tenure with this less-than-ethical company. Seriously - it's the EXACT SAME PARTY LINE!!! Come on folks, stop drinking the Regence kool-aid and see for yourself the kind of "not-for-profit" company you work for!

“Regence is unusual in that it is a nonprofit entity but nonetheless is fully taxed. This is in contrast to many of our nonprofit competitors (Providence, ODS, PacificSource, and Kaiser, for example) who are nonprofit and are exempt from many taxes." Actually, PacificSource is also a not-for-profit health plan that, like Regence, is fully taxed. I can’t speak for ODS, Providence, or Kaiser, but want to avoid any misconception that PacificSource is a tax-advantaged entity. - Colleen Thompson, PacificSource Health Plans

If Regence really is "committed to improving the health and healthcare of people throughout the communities" they serve, they would use their investment earnings to reduce premiums. How about the "new and innovative" idea of making health care affordable? In their early days, Blue Cross and Kaiser set up these plans as flow-through health care funds for shipyard and aluminum plant employees. BC/BS' success at investing their reserves has gone to their heads instead of their hearts. It's time to put those earnings back where they belong, into direct health care.

Fluff job. "We have always sought to invest wisely the assets of our company." Not so fast there, hon. I would say that the original Facets implementation - you know the one, it almost brought Idaho down - wasn't exactly a "wise" investment of assets. In fact, the external auditor, Deloitte, forced Regence to recharacterize the "investment" as an expense rather than a capital asset, since the entire project had no long-term value. I’m not so sure that CP-SS was much of a wise investment, either. A HALF-BILLION on a Facets conversion is NOT investing wisely. Maybe the current Regence strategy of having an East Coast Blue process your claims so that you can work through the backlog is a better investment than trying to develop your own claims systems. With renting another Blue’s claims processing capacity, at least, claims are being processed timely - gets the DOI off their back and their association scores bumped up. Is it true that these claims are handled "pay as billed" with no edits or audits? Is Regence planning on 'fixing it on the back end" or just letting those provider payments fly without audits? How much is THAT going to cost in overpayments?

"We have always sought to invest wisely the assets of our company." Like the wise investment with DC lobby/PR firm Glover Park? How many $ millions did Regence sink into that one, and what do they have to show for it? A couple of sorry drafts of a ghost written book for Mark Ganz?

Millions of dollars wasted on implementing Facets and cheron vail still has a job? Regence cannot build nor support adequate infrastructure with consistent financial fluidity. This cost often is passed throug to consumers. Duh.