After weeks of scrutiny of CareFirst BlueCross BlueShield money issues - executive bonus packages and the company's sale price - the focus now shifts to how the insurer's proposed sale will affect the public.

Over the next month, Maryland Insurance Commissioner Steven B. Larsen will be getting reports on the impact of a CareFirst sale on consumers - How will premiums change? Will coverage be more or less available? - and on the potential for using money from the sale for health-related foundations.

Larsen will hold hearings on those issues at the end of January and rule in February on whether the deal is in the public interest.

CareFirst, the state's largest health insurer, wants to convert to for-profit operation and be sold to California-based WellPoint Health Networks Inc. for $1.3 billion. The deal requires the approval of Larsen and the Maryland legislature, as well as regulators in Delaware and the District of Columbia.

CareFirst hopes the next round of reports and hearings will show the public and legislators the benefits of a deal. The bonuses and sale price, topics covered in three days of hearings last week and in a series of reports over the past month, have been flash points for opponents of the deal.

"Now that the more sensational issues have been aired, we want to turn the attention to the impact on the jurisdictions," said John Picciotto, CareFirst executive vice president and chief counsel. "That's where we feel the debate should be now - and where it should have been from the beginning."

But the "more sensational issues" were hardly put to bed at last week's hearings.

Larsen's consultant, the Blackstone Group, testified that CareFirst is worth "in the $1.8 billion range" - a half-billion dollars more than the negotiated price.

But the $1.3 billion price was termed "aggressive" by WellPoint's investment banker, Gregory Sorensen, of Banc of America Securities, who said it didn't reflect marketplace declines since the price was set.

Analysts have predicted that WellPoint would be willing to pay somewhat more than $1.3 billion, but would walk away from the deal if Larsen set a valuation that was too high. Larsen said he would ask Blackstone to update its valuation shortly before he issues his ruling.

Adding even more uncertainty to the deal is the package of $119.7 million in deal bonuses, severance payments and tax benefits that CareFirst's executives could collect.

Larsen hinted strongly at the hearings that he won't approve the deal as long as it includes an executive bonus package. CareFirst's board chairman, however, testified that he wouldn't make any revisions to the deal until after Larsen rules.

The bonuses were barred by the Maryland legislature earlier this year. The General Assembly also required any deal to be all cash, not cash and stock as spelled out in the current sales agreement.

While William L. Jews, CareFirst's chief executive officer - who stands to pocket $39.4 million in bonus, severance and tax benefits under the current agreements - said the legislature cannot retroactively alter his contract, the state takes a different view.

An opinion from the attorney general's office said the General Assembly had the power to legislate changes to a pending application.

While Larsen has been careful not to indicate how he will rule on the CareFirst deal, he made it clear last week that he views the bonus plan with suspicion.

Larsen sharply questioned CareFirst board members, consultants and lawyers on the bonuses. None would say whether they thought this year's anti-bonus law applied. All said they thought the payments were legal despite a 1998 law that says executives cannot benefit inappropriately, a legal term known as "inurement," from a Blue Cross conversion.

Another of Larsen's consultants, Jay Angoff, a former Missouri insurance commissioner, testified that the payments did constitute inurement.

"The current formulation of the statute would prohibit me from approving the deal if I find there is inurement," Larsen said at one of the hearings.

Daniel J. Altobello, chairman of the board of CareFirst, responded, "The board does not intend to take up that issue until you have made your ruling about what is approved and disapproved."

If Larsen does not approve the deal as now constituted - even one of CareFirst's lawyers testified that Larsen is expected to require cash payment - there are a number of possible scenarios:

CareFirst's board could change its mind and submit a revised deal before Larsen rules.

"If the compensation is different and the sale price is different, I don't see [submission of a revised application] delaying the process," Larsen said, although adding that complex compensation arrangements might take time to analyze.

WellPoint has said it wants to renegotiate. Ken Ferber, a WellPoint spokesman, said, "We still feel the deal needs to be compliant with the law."

Larsen could approve the deal but attach conditions such as a higher price, all-cash payment or no bonuses. CareFirst and WellPoint would then have to decide whether they would meet the conditions.

David M. Funk, the lawyer representing CareFirst and WellPoint in the regulatory review, said, "This is a transaction that has three parties - CareFirst, WellPoint and the commissioner - and all three have to agree."

Larsen could turn down the deal, and CareFirst and WellPoint could submit an amended application which attempts to meet whatever objections he raises.

"Clearly, I think it is better to have an order approving with conditions than disapproving," Funk said. But, since either would require an amended deal, "I don't know, at the end of the day, that it makes a whole lot of difference."

Since Larsen's term ends in June, and he has said he does not expect to seek reappointment, a revised deal could be filed with a new commissioner.

Larsen could turn down the deal, and CareFirst, or individual executives with bonus and severance agreements, could go to court to challenge his ruling. This would be politically tricky, since the legislature gets a 90-day period to review Larsen's decision.

There has been some speculation that if the deal were blocked in Maryland, CareFirst could try to convert and sell its more profitable operations in Delaware and the District of Columbia. The other jurisdictions have retained their own consultants and are expected to hold hearings in the spring and issue decisions by summer.

Larsen got an opinion from Attorney General J. Joseph Curran Jr. last month saying he would have authority to review an attempt to convert and sell the district plan.

Picciotto said CareFirst has no plans for a partial sale and conversion. "We still say this transaction is a three-legged stool, and each of the jurisdictions must approve it."

Ferber, the WellPoint spokesman, said, "We made a deal for all three. Nothing else is being considered."