Premera’s for-profit plan under fire

MOUNTLAKE TERRACE — The state’s deputy insurance commissioner has told Premera Blue Cross that its plan to become a for-profit insurer may need significant changes.

That statement, made public this week, was contained in an e-mail from deputy commissioner Jim Odiorne to Premera lawyer Yori Milo.

The sign of trouble comes just days before consultants issue their final report on Premera’s proposed conversion. That report is due to Insurance Commissioner Mike Kreidler on Monday.

Last year, the Mountlake Terrace-based health insurer applied to convert from a private nonprofit firm into a profit-making corporation. The plan submitted by Premera, the state’s largest health insurer and one of Snohomish County’s biggest employers, has generated strong opposition from some doctors and hospital groups.

In an Oct. 14 e-mail, Odiorne told Milo it was premature to discuss conditions of approval for the conversion plan, saying the insurance commissioner’s staff had not decided whether to recommend that Kreidler approve it.

"In fact, based upon my review of the consultants’ draft reports, I cannot imagine how the OIC staff can recommend to the commissioner that the application be approved without substantial and significant amendment," Odiorne wrote.

As Odiorne leads the staff that will advise Kreidler on whether to approve Premera’s plan, his opinion carries significant weight. In a meeting Wednesday in Olympia, Kreidler said it’s possible that Premera might have to resubmit its entire proposal.

Scott Schoengarth, a spokesman for Kreidler’s office, said Thursday that the existing schedule, which calls for Kreidler to rule on Premera’s wishes by March 15, is still in place.

After Wednesday’s meeting, Kreidler decided that changes to Premera’s application made after an Oct. 15 deadline do not have to be included in the consultants’ final report. Premera had argued that the changes simply addressed issues brought up by the insurance commissioner’s staff and by consultants.

Another potential cause of trouble for Premera’s for-profit quest is an ongoing federal investigation into allegations that the insurer processed Medicare claims incorrectly and lied about it. Premera has denied any wrongdoing. The investigation, which usually would remain secret, was revealed in U.S. District Court papers that became public when Premera contested the way prosecutors wanted to review documents in the case.

Reporter Eric Fetters: 425-339-3453 or

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