Healthcare consumer groups in California are accusing insurance company Blue Shield of California of reneging on a $140 million charitable commitment it made to win approval for an acquisition.

Earlier this year, state regulators approved the insurer's acquisition of Care1st in an agreement in which the organization pledged to increase its investment in the state's healthcare safety net by $140 million over ten years. Health Access, a statewide healthcare consumer advocacy coalition, has raised concerns with the Department of Managed Health Care that Blue Shield has mentioned $14 million as a "floor" for its total annual support for the state's safety net — rather than as a requirement for additional giving, as was widely reported when the acquisition was first approved — and may actually give less than it did in previous years if its interpretation of the agreement is allowed to stand.

According to the Los Angeles Times, state officials said last month that the insurer had agreed to give $14 million annually for ten years to its foundation or another charity in addition to its regular contributions, while Blue Shield CEO Paul Markovich insisted that the pledge did not represent additional money. Markovich pointed, instead, to an extra $60 million the company agreed to invest in several healthcare initiatives, including a statewide provider directory and funding for consumer assistance programs.

In a November 12 letter to the insurer, DMHC director Shelley Rouillard said her "expectation in approving the transaction was that Blue Shield would increase its overall charitable contributions to improve healthcare delivery in California. This intent was expressed during the negotiations process." She stopped short, however, of requiring Blue Shield to increase its giving, acknowledging that "reasonable people may disagree about the meaning of the language" in the agreement. A spokesperson for the company told the Times that Rouillard's letter "makes clear what we agreed to. The $14 million a year was set as the floor."

"It's unfortunate the agency and the public got snookered out of $140 million for our safety net," Health Access executive director Anthony Wright told the Times, adding that he and other consumer advocates will continue to press Blue Shield's board and state policy makers to address these merger conditions. "If Blue Shield really wants to assert it has a nonprofit mission, as it actively markets itself," said Wright, "it would abide by the spirit of the conditions and make the additional contributions to improve the state's safety-net as many expected."