ANNAPOLIS – Controversy-plagued CareFirst BlueCross BlueShield is now caught in the crossfire between the jurisdictions it serves.
The District of Columbia’s insurance chief recently ordered the company to ignore a new Maryland law meant to overhaul CareFirst in the wake of its highly criticized attempt to go for-profit. The sides will meet Wednesday, Nov. 12, to try and reach a solution.
“I’m hopeful we will come to a resolution . . . and that we’ll continue the collaborative relationship we’ve had since June,” said Maryland Insurance Commissioner Alfred Redmer.
Maryland’s new legislation prevents CareFirst from converting to for-profit for five years, replaces the board and establishes an oversight committee. The legislation was enacted after the state’s insurance commissioner found that top company executives would have made $119 million from the merger with WellPoint Health Networks Inc., a California-based company.
Lawrence H. Mirel, District insurance commissioner, issued his countermanding order Oct. 24 telling CareFirst and its affiliates to ignore the Maryland law, arguing the District’s plan needs to be controlled by the District, not by Maryland.
“I think what Maryland did was terrible. It’s up to the company to decide what it wants to do, not Maryland,” said Mirel.
Mirel wants Group Hospitalization and Medical Services Inc., CareFirst’s District-based plan, to continue as part of CareFirst, but have voting power. Many subscribers of GHMSI are employed in the District, but reside in Maryland, aggravating the territorial debate.
Maryland lawmakers said they have been open to working with the District in drafting and revising the law, but until Mirel issued his order received no response.
“The General Assembly is more than willing to modify the existing law, as long as we preserve the integrity of what the Legislature was trying to accomplish,” said Redmer.
Mirel argues the opposite, saying he was notified just four days before the original legislation passed.
“I don’t call that collaboration,” said Mirel. He said he pointed out problems with the bill to Gov. Robert Ehrlich, but the governor signed it into law anyway.
“We have made it clear that any time and place they want to sit down, we’d welcome that opportunity,” said Sen. Thomas Middleton, D-Charles. “Until now, they have not utilized that offer.”
CareFirst said Mirel recognizes the importance of remaining competitive, especially since CareFirst’s main competitor, the Mid Atlantic Medical Services Inc., merged with UnitedHealth Group Inc., the nation’s largest health insurer.
“Mirel understands the advantages of size, scope and geographic reach . . . all reasons why CareFirst originally proposed the transaction with WellPoint,” said Jeff Valentine, spokesman for CareFirst.
If an agreement between the jurisdictions is not reached, Mirel’s order could allow GHMSI to become for-profit.
“The order immediately puts us in conflict with our ability to comply with the legislation enacted by the General Assembly,” said Valentine.
CareFirst’s board will meet Nov. 20 to decide if GHMSI will be controlled by the District. This vote, however, does not guarantee autonomy.
“It is all subject to Redmer’s approval . . . Mr. Redmer can say, ‘No way,'” said a spokesman for the District’s insurance commissioner. “We believe it’s best to go our separate ways.”