Insurer's Use Of Not-for-Profit Assets Questioned

MANAGED CARE April 1998. ©1998 Stezzi Communications

Health care consumer groups are taking a dim view of an Independence Blue Cross subsidiary's planned purchase of two small health networks in Florida and Texas. Specifically, the groups want to know how the not-for-profit, Philadelphia-based insurer can shift revenue it collects as a tax-exempt Pennsylvania entity to its for-profit HMO, AmeriHealth, for purposes of out-of-state acquisitions.

The Pennsylvania attorney general's office says it is monitoring the transaction to ensure that charitable assets are being used properly. Independence, which expects to complete both deals later this year, responds that any revenue growth derived from ownership of out-of-state networks enhances its ability to carry out its social mission back home.