The state of California has approved Blue Shield of California's $1.2 billion deal to buy Care1st Health Plan, a Los Angeles-based managed-care company. The move allows the insurer to work with Medi-Cal and Medicaid beneficiaries but also means a permanent loss of its state tax-exempt status.
Blue Shield of California, which has more than $13 billion in annual revenue and 4 million members, will remain not-for-profit. Care1st Health Plan has more than 500,000 members and will become a not-for-profit after closing.
To gain state approval, Blue Shield had to agree to put $200 million toward increasing healthcare transparency and accessibility, as well as support consumer-assistance programs. It also agreed to improve its quality-of-care performance and improve the Care1st network of contracted specialty providers.
Consumer group Health Access California issued a statement calling on the California Department of Managed Health Care to make sure Blue Shield sticks to commitments in the deal.