Behind the Scenes of the Anthem/MU Deal

For months, tens of thousands of Missourians were left in a dangerous limbo.

A contract dispute between MU Health Care and Anthem Blue Cross Blue Shield, two of the state’s largest healthcare entities, threatened the coverage and continuity of care for more than 90,000 people across Missouri.

At the heart of the standoff was money. MU Health Care sought a 20–30% increase in reimbursement rates over three years, citing a 7% year-over-year rise in operating costs and comparisons to similarly sized research and teaching institutions like the University of Kentucky. Leaders argued that the increase was essential to sustain services, expand access, and fairly compensate staff.

Anthem disagreed, warning that such increases would raise premiums and out-of-pocket costs for employers and patients. After months of failed negotiations, the contract between the two organizations officially expired on April 1.

Last week the parties involved came to a general agreement that would end the dispute and publicly announced it Tuesday. Here is a look at how those parties came to their agreement.

The problem was on the horizon for several months. However, it wasn’t until April 1st that the contract actually expired. While the brewing crisis received a good deal of coverage, on the Missouri political calendar April 1st through May 16th is the end of the session of the Missouri General Assembly so it was never the top story.

This year the regular session was followed by an extraordinary session centered around funding sports stadiums which ate up another month of attention from both the public and government leaders. After that the state’s attention focused on the MU vs. Anthem dispute.

The Background: How MU and Anthem got Here

To really understand how the deal came about you have to understand the players.

The University of Missouri has a long and mostly proud history, but most would say that today would be the golden era of Mizzou for anyone born after 1970. This golden era has risen out of what was its darkest hour in 2015.

The campus was beset with unrest and the football team was refusing to play. That combined with nearly being bounced from the AAU and sluggish enrollment Mizzou also saw its low point in influence in the capitol and in the state at large.

To put it plainly they were arrogant and elitist, and their supporters were few and far between. Then this Anthem dispute is the exact type of situation where they would have dug in and made ridiculous demands, and settled for nothing but every single thing they wanted and made everyone who dealt with them miserable.

Those who cared about Mizzou saw the iceberg coming before it hit in 2015. Governor Jay Nixon who was a Mizzou alum saw the decline and decided something had to change. He decided to appoint someone with the balls to speak up about the mounting problems, even if it meant offending someone. Someone who was pretty immune to group think. Someone who would understand the delicate balance between the left wing professors, and the right wing General Assembly.

He chose his opponent in the 1992 Attorney General’s race David Steelman. He chose wisely.

Enter the Gentleman from Dent

Steelman started off quickly asking the questions that before no one dared ask. In one appointment Governor Nixon turned a rubber stamp board into one not afraid to ask the questions a board of curators should ask.

The unrest in 2015 led to then President Tim Wolfe to resign, no one missed him, followed by the very well meaning and stabilizing Micheal Middleton to step in as an interim. Then the curators, led by now leading curator David Steelman, made the most important decision any board of curators had made in the last quarter century before, or in the ten years since.

They hired Dr. Mun Choi to be the new president.

Just as Governor Nixon transformed a rubber stamp board of curators in one appointment. The board of curators transformed an elitist, arrogant, tired, stale, and generally despised university into one that was suddenly welcoming, and energized, and down to earth, and one that would become beloved once again in all corners of the state.

Choi was a house of fire. One of his early hires was to bring in the Chief of Staff to the legendary Senator Ron Richard, Dusty Schneiders to run governmental affairs. Prior to Schneiders, if you had actually seen Mizzou’s person in the capitol you should have got a picture because no one else did. He came in and in what seemed like overnight took an institution that was despised in the capitol and turned it into one of the most popular institutions in the capitol.

Prior to this strategic hire, Clif Smart, the legendary former President of Missouri State, had free range in the capitol to have a veto over any higher ed policy he cared about. After Schneiders got his feet under him the capital became a level playing field, not to mention Schneiders bringing millions of state appropriations back to MU.

This was the wall Anthem was running into when the negotiations stalled out. They were going to be cast as the bad guy. Not really on the merits because no one really understands the merits anyway, but because the once very unpopular Mizzou…was actually popular again.

Now the pre-Mun Mizzou was so despised Anthem would have actually been the good guy in this fight. However, this dispute was not happening in 2015. It was happening against Mun’s Mizzou, and Anthem was going to look like the bad guy, facts be damned.

Now don’t get me wrong, Anthem was not walking into this fight unarmed. They had a very skilled team of lobbyists in the capitol, and some public relations folks lobbying the press for them. Josh Haynes doesn’t get enough credit for holding the line during session with the odds well stacked against him. Still in this era they had an uphill fight against the “true sons”.

Enter the Senator from Shelby

If there was one politician in Missouri most like President Trump, not the one who most kisses his ass, but the one most like him it would be the Senator from Shelby, Cindy O’Laughlin.

She is the plain spoken, hard working, dealmaker who apart from the two PQs is the person most responsible for getting the senate working again. On June 13, Senator O’Laughlin announced that the Senate would hold a hearing for Anthem and MU higher ups to hash out their differences in front of Senator Sandy Crawford’s Insurance and Banking Committee.

During the hearing, Chair Senator Crawford made clear just how serious this issue was shaping up to be as she read aloud letters from residents directly affected by the breakdown. One family described the turmoil of having to leave MU doctors who had performed life-saving heart surgery on their daughter, twice before she turned four.

MU Health CEO Ric Ransom testified that the hospital system had been trying to renegotiate in good faith for over a year, but that Anthem had failed to “meaningfully engage” in recent months. Anthem officials pushed back hard, accusing MU of “patient abandonment” , a term carrying legal implications and citing the hospital’s two-star rating from federal regulators.

Meanwhile, state employees and families on employer-sponsored Anthem plans faced mounting confusion. The Missouri Consolidated Health Care Plan (MCHCP), which provides insurance to many public workers, worked behind the scenes to push both parties toward a resolution. Their new Executive Director and former House Speaker Pro Tem John Wiemann had just started the job on May 19th and was thrust right into the fire.

There were several who questioned whether it was right for the state Senate to get involved in a matter between two independent companies’ affairs. However, most would say that no high level discussions had taken place in weeks, so what is the worst that could happen?

Senator O’Laughlin took to her newsmaking Facebook page to announce that the hearings were happening and it would ensure that the two sides started talking again.

Anthem Makes its Move

Typically senate committee hearings are mere formalities. 90% of them are just checking a box and if a senator really wants their bill moved out of committee they are obliged. Unlike in the House, Senators typically handle their business on the floor.

However, this hearing was different. There was no legislation to move out, there was no bill to report. There were just two big big companies with millions of dollars and thousands of patients in the balance.

One other thing changed in the weeks following session leading up to the hearing. Anthem hired one of the greatest crisis management firms in the country. Jeff Roe’s Axiom Strategies. This was by any definition a crisis, and Anthem’s move would begin paying dividends right away.

First of all Axiom had longstanding relationships with several of the key players. They were the consultants for Senator O’Laughlin’s senate run in 2018. They also have a decades-long relationship with the incredibly connected and imminently respected President of the Board of Curators Todd Graves, and the Majority Leader of the Senate Tony Luetkemeyer, and for that matter most anyone who is anyone in Missouri politics.

I’m honestly not sure that any of those pulled a 180 in support of Anthem just because Axiom came onto the scene, but there is no question that there was a subtle change in just how far anyone was willing to go against Anthem after Axiom was hired.

Further, there was now an open line of communication between Anthem and state leaders. A line of communication that was more important to most in state government than this one fight, or really any one fight. There would certainly be other fights like this MU vs. Anthem fight, but once the dust settled from this fight regardless of how it turned out, there would still be only one Axiom and in Missouri politics you really don’t want them against you.

The difference in Anthem’s approach was also decidedly different. Anthem chose to approach this public forum not as a nuisance of government meddling in their private negotiations, but as a forum to change the narrative, a chance to break the impasse.

They walked into that hearing up to this point the bad guy by default. Now to be fair they were still the bad guy, but now the bad guy with Axiom standing behind them so no one was feeling bold enough to call them the bad guy to their face, or more honestly to Jeff Roe’s face, but still the bad guy.

After all, Mizzou had won back to back bowl games, and insurance executives were being shot in the streets. The senators no longer had disgust for Mizzou, in fact they were proud of Mizzou.

The deck wasn’t exactly stacked against them, but before the hearing if that committee had a vote on who was going to win this fight, they would have voted for Mizzou.

That’s when Rich Novak, President of Elevance Health, turned the debate on a dime and made a big bold offer. It was magnanimous, and by most accounts generous. It was an offer that by all accounts was more to the Mizzou side of the negotiations than their own, but it was an offer that changed the entire debate to show them as the party most eager to get a deal done.

When the hearing gaveled in, few understood the details of what was really happening, but leaned toward supporting Mun’s Mizzou over an insurance company.

When the hearing gaveled out, everyone just wanted a deal damn the details, and suddenly Anthem looked like the party most eager to deliver that deal that everyone wanted.

It was the smartest political move most had ever seen in a senate committee. It changed the debate, it turned the situation. It was brilliant. Possibly Brookfield brillant.

After the Hearing

The day of the hearing MU and Anthem met in Senator O’Laughlin’s office. The office doesn’t have the large desk customary in the Pro Tem’s office. It has a relatively small desk up against the wall. There is still the large meeting table, but in place of the big desk that Senator Schatz sat behind drinking those Golden Lights is an arrangement of chairs in a circle meant for bringing folks to agreements. Often folks who don’t really want to be brought to any agreement.

After that meeting she took to Facebook to express cautious optimism, and threw out the timeline of “next week”. Behind the scenes the pressure began mounting from all sides including Governor Kehoe and Wiemann to get a deal done. Again, the momentum had changed towards getting a deal, any deal. Something Anthem had figured out, and was capitalizing on.

Senator O’Laughlin then set down the marker that if they had not come to an agreement by the following Tuesday she wanted them back in her office. Perhaps more importantly, Governor Kehoe had said if there was no agreement by the following Friday both sides were to be in his office. Even House Budget Chair Dirk Deaton chimed in with a nudge to Mizzou to get a deal done.

Now this where you can tell it’s not the old Mizzou, it’s Mun’s Mizzou. There was a time pre-Mun that Mizzou would have responded to an offer, even one where they would clearly win the negotiations, but not get everything they wanted by digging in and demanding they get it all. They would have stalled, and stonewalled, and generally made everyone’s life miserable, and become even more despised.

In Mun’s Mizzou they took a couple days to think it over, modified a few points on the deal and to the delight of Governor Kehoe, Senator O’Laughlin, and 90,000 people impacted took the W.

Senator O’Laughlin again took to her Facebook page to announce:

Going forward
Most view the takeaways from this saga as:

• Mizzou has the muscle to flex against even a corporation as large as Anthem.

• Anthem made one of the most savvy moves most can remember in a senate committee.

• Senator O’Laughlin can find deals where others simply can’t.

• Axiom is a brilliant crisis management firm.

• Wiemann passed his trial by fire in the first 60 days of his new job.

• There may be some new ways of approaching these negotiations in the future.