Long WellPoint talks expected.

Negotiations between state regulators and the principals behind a planned $16.5 billion merger and acquisition of Thousand Oaks-based WellPoint by an Indiana company are proceeding in Sacramento, although no resolution is expected for "weeks," participants said.

The discussions are over the requirements, known as "undertakings," the state wants from the companies, WellPoint and Indianapolis-based Anthem Inc., prior to approval of the deal.

State Insurance Commissioner John Garamendi, who has authority over WellPoint's insurance business, has said he wants the new company to invest heavily in health care for low income communities in California.

"We are meeting continually with the Department of Insurance and the companies," said Lynne Randolph, a spokeswoman for the state Department of Managed Health Care. "We're discussing those points with the DOI, but no agreement has been reached and no statement has been made."

The merger, approved in June by 97 percent of the voting shareholders of WellPoint Health Networks Inc. and Anthem would create one of the largest for-profit health care corporations.

The DMHC has oversight over WellPoint's health maintenance organization. Director Cindy Ehnes, an appointee of Gov. Arnold Schwarzenegger, will decide whether to approve any deal.

"She is the final decision maker in this matter, and she needs to remain impartial until those undertakings come to her desk," Randolph said. "We do not have a timeline at this point, but we are working as quickly as we can to come to a resolution ... possibly within weeks."

The merger is to be financed by $700 million in cash, $3 billion in debt, and $12 billion in stock.

At a hearing on the proposal his agency held in June, Garamendi was highly critical of the deal's impact on health care in California. He has been especially harsh about estimates that compensation for former WellPoint executives could range from $200 million to $600 million in cash and stock options.

Particularly controversial has been the package for current WellPoint CEO Leonard D. Schaffer, who would be entitled to $47.5 million in cash and $6 million in stock options.

"I have serious concerns that the acquisition is detrimental to the policy holders as proposed," Garamendi said last week. "I have recommended several ways in which it can be modified, (including) investment in low income communities (and guarantees) that Californians would not pay for this merger and the executive compensation."

If approved, the merger would result in a new, Indianapolis-based holding company, also named WellPoint, controlling insurance companies and HMOs.

The new holding company would own both the Blue Cross of California HMO and Blue Cross Life & Health Insurance, which together cover almost 5.2 million Californians.