CareFirst BlueCross BlueShield executives told Maryland legislators yesterday that the company is committed to returning to its nonprofit roots -- an issue that has put the Washington area's largest health insurer at odds with the General Assembly.
"We will learn from our mistakes, I'm certain," CareFirst's chief lobbyist, Frances P. Doherty, said yesterday at a joint House and Senate committee hearing on the implementation of a new Maryland law aimed at reforming the Owings Mills, Md.-based insurer.
Under questioning, CareFirst's chief lawyer, John A. Picciotto, accepted that the company would move back to its nonprofit mission, but neither he nor Doherty were specific about CareFirst's plans.
Many legislators have said CareFirst has a special obligation to remain nonprofit because it has received tax breaks and subsidies from the state during its 66-year history.
CareFirst, which insures 3.2 million people in Maryland, the District, Delaware and Northern Virginia, said in 2001 that it would sell itself to a profit-making insurer. The state rejected the plan this spring after hearings at which executives from CareFirst and the national Blue Cross and Blue Shield Association testified. The state found that CareFirst planned to pay millions of dollars in illegal bonuses and incentives to its top executives.
Yesterday's hearing was the first since Gov. Robert L. Ehrlich Jr. (R) signed a law May 22 that gave the state more control over CareFirst's operations, including the right to appoint 10 board members and review top executives' pay. The law also prohibits CareFirst from converting to a profit-making company for five years.
The Blue Cross association responded to the law by terminating CareFirst's Blue Cross license, saying the state control stripped the independence that Blue Cross licensees are required to have. That, in turn, threatened the benefits of many CareFirst members.
On June 6, Maryland officials agreed to a scaled-back oversight plan in which the state would appoint five, instead of 10, board members.
At yesterday's joint hearing of the House Health and Government Operations Committee and the Senate Finance Committee, some legislators suggested that CareFirst executives misled them by not advising them until recently of the national association's concerns.
"I apologize to anybody who believes that we misled them," Picciotto said.
The legislators expressed disappointment that CareFirst's chief executive, William L. Jews, did not attend the hearing. Jews was in Chicago yesterday at a Blue Cross association meeting. |
