R.I. Blues Receives Initial Green Light for For-Profit Wellness Subsidiary

November 29, 2005

Despite a petition from the state attorney general, the state’s top insurance regulator has conditionally approved Blue Cross & Blue Shield of Rhode Island’s plan to create a for-profit subsidiary.

Health Insurance Commissioner Christopher Koller ruled last week that the state’s largest health insurer can establish a Wellness Institute once it proves the venture complies with the insurer’s nonprofit mission and charter.

Koller said Blue Cross also must better explain the institute’s services, and its out-of-state ventures must also benefit Rhode Islanders; its financing must enhance Blue Cross’s solvency; and it must meet state laws and regulations.

Koller asked Blue Cross to provide his office with detailed financial projections.

“That’s meant to protect against money-making ventures out of state that might be boondoggles that have no chance of succeeding,” he said.

Blue Cross spokeswoman Kim Keough said the insurer was “extremely pleased” with the ruling. Koller will receive the information he requested as soon as possible, she said.

The insurer already has a wellness division that offers services like smoking cessation and diet classes to customers, company officials said. They say healthy behavior leads to lower health care costs.
The for-profit Wellness Institute would offer similar services to companies that do not use Blue Cross as their health insurer, Keough said.

Attorney General Patrick Lynch petitioned Koller in July to withhold approval for the new subsidiary. He feared Blue Cross would use premiums collected from Rhode Island subscribers to finance the venture. Lynch also questioned whether Blue Cross would use information collected from Wellness Institute participants to justify increasing their premiums.

Koller’s ruling discounts both concerns.

Blue Cross officials have said they will use a bank loan to finance the Wellness Institute. And existing federal laws safeguard patient confidentiality, Koller said.

Topics Profit Loss

Was this article valuable?

Here are more articles you may enjoy.