Hoping to quiet the critics who say CareFirst BlueCross BlueShield is not fulfilling its nonprofit mission, the Owings Mills, Md.-based insurer on Tuesday unveiled a $92 million plan that it says will help keep health care affordable for its 3.2 million members and broaden CareFirst's regional role in improving access to quality care.
Under the plan, dubbed "CareFirst Commitment," the Washington area's largest insurer will lower its operating earnings target by at least $60 million in 2005 from forecasted income during the previous year to stabilize premium costs.
While final audited numbers are not yet available, CareFirst says it is forecasting a net operating income margin of about 3.5 percent of premiums and fees in 2004. Under the revised earnings target, net margins will drop to 2.2 percent this year.
"Our net margins from operations in recent years already have been lower than those of most not-for-profit Blues Plans across the nation," says CareFirst President and CEO Bill Jews. "We now are going one step further."
CareFirst will invest $8.7 million this year to launch initiatives the insurer says will encourage "excellent physician care, improve patient safety, enhance hospital intensive care and reduce racial and ethnic health disparities." In addition, CareFirst says it is budgeting $20 million to fund these initiatives in 2006-2007.
The insurer also will continue to contribute $24 million annually to fund public-private programs that provide prescription drugs for low-income seniors in Maryland and offer coverage for uninsured residents in the District.
CareFirst has been sharply criticized in recent years for its attempt to sell itself to a California-based insurance giant and convert to for-profit status, a deal that was nixed by Maryland's insurance commissioner at the time, Steve Larsen, in part because of lavish, multimillion-dollar bonuses that CareFirst execs were to receive as a result of the acquisition by WellPoint Health Networks (NYSE:WLP).
CareFirst execs and board members are hoping this new plan, announced Tuesday in both the District and Annapolis, will help restore faith in their business as a nonprofit insurer.
Says Michael Merson, board chair of CareFirst: "This strategy represents our pledge that CareFirst will be a leader in improving health care affordability, access, safety and quality in all of the communities we serve."
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