ANNAPOLIS – CareFirst BlueCross BlueShield’s proposed conversion to a for- profit entity came under fire Thursday with the passage of a bill shifting the burden of proof for its conversion onto the health insurer.
CareFirst would have to prove the conversion and its proposed sale for $1.3 billion to Wellpoint Health Networks Inc. of California would be in the best interest of Maryland citizens under the bill advancing to the Senate.
As the law stands now, the burden falls on Insurance Commissioner Steve Larsen to determine public interest. If he determines the sale is not in the public interest, it would not take place.
Larsen said he is assembling a panel of experts to examine the possible benefits and affects if the sale goes through. A decision would come soon after the panel completes its review, expected to take about 12 months, he said.
The CareFirst conversion is being assailed on other fronts as well.
On Wednesday, Delegate Dana Dembrow, D-Montgomery, introduced legislation to allow the Insurance Commission to regulate nonprofit directors’ salaries.
Dembrow’s bill would require non-profit health insurers’ board of directors to report their salaries or other compensation to the State Insurance Commission. The Insurance Commission would also have the power to regulate those salaries.
The inspiration for the bill came when Dembrow learned that the annual base salary of the chief executive officer of CareFirst is reportedly $2 million. Dembrow said it was unreasonable for someone at a nonprofit agency to be making that much money.
“They’re a nonprofit,” he said. “It’s time they started acting like one.”
Other Maryland lawmakers have introduced bills targeting CareFirst by pushing it to return to its generally perceived status of being Maryland’s insurer of last resort. CareFirst has been trying to distance itself from such a designation, which implies it would provide insurance to high-risk individuals, such as the terminally ill.
Under a bill proposed by Sen. Robert R. Neall, D-Anne Arundel, CareFirst would have to operate a managed care organization in the State Medical Assistance Program to receive tax breaks. CareFirst now receives tax exemptions solely because it is a nonprofit.
Two Maryland delegates have been stepped out of the debate because of possible conflicts.
Delegate John Hurson, D-Montgomery, recused himself from any legislation involving CareFirst. Hurson, chairman of the House Environmental Matters Committee, works at a public relations firm recently hired by CareFirst.
“Under the ethics law, if there’s an appearance of a conflict of interest, the usual practice is for a legislator to disclose it,” said William Somerville, ethics counsel to the General Assembly.
Hurson didn’t have a direct relationship with CareFirst, but his employer did, Somerville said, a possible conflict of interest that Hurson was obligated to report.
However, Hurson did not have to recuse himself from voting, and took the extra measure on his own, Somerville said.
House Minority Leader Alfred Redmer, R-Baltimore County, also disclosed a possible conflict on the CareFirst issue. His employer also does business with the company. Redmer, however, has not recused himself from voting on CareFirst legislation.
Somerville said Redmer chose a different route: “Rather than say, `I’m not going to participate,’ he turned it over to the ethics committee (to decide).”