CareFirst BlueCross BlueShield announced yesterday a revamping of its board - its latest response to criticism that has shadowed it and other nonprofit health insurers around the country who were said to be acting too much like profit-making companies.
Along with naming nine new board members, CareFirst named new chairmen for its board and for the board that oversees its Maryland operations.
Michael R. Merson, former chief executive of the Helix Health hospital system, will chair the overall board. John M. Colmers, a former Maryland health regulator, will chair the Maryland panel.
The new leaders, Merson and Colmers, were picked for the CareFirst board last year by a state committee to replace board members who had approved selling the company last year to a private health insurer. Maryland regulators blocked the sale.
The CareFirst changes come as regulators across the country are scrutinizing nonprofit Blue Cross and Blue Shield plans in their states.
"What you're seeing is a tremendous pushback in a number of states on nonprofits who haven't been behaving like nonprofits," said Dawn Touzin, of Community Catalyst, a Boston consumer health advocacy organization.
Maryland's rejection of the CareFirst sale helped prompt other states to look at issues such as executive compensation, surplus levels, premium costs and efforts to help cover the uninsured, Touzin said.
Under the CareFirst proposal, the state's largest health insurer sought approval of a plan to convert to for-profit operation in order to sell itself to a California company for $1.3 billion.
Lawmakers, angered by the plan and by executive bonuses tied to the deal, responded with legislation replacing board members and locking in CareFirst's non-profit status for at least five years.
The first five new board members, including Merson and Colmers, were picked by a state nominating committee. The existing board then chose the new members announced yesterday - seven for the overall board and two for the Maryland panel.
CareFirst also has operations in the District of Columbia and Delaware. But boards for those affiliates were not affected by the Maryland reforms.
The CareFirst appointments are the latest - but not the final - step in a process of shaping the company's future as a nonprofit, according to both critics of CareFirst and the outgoing board chair.
Beverly B. Byron, the former congresswoman who has chaired the board since January, said she had worked for "rebuilding trust with the legislature" and setting an agenda for public service activities CareFirst would pursue as a nonprofit.
"We're not 100 percent there, but we've moved closer," Byron said.
With a new board majority in place, "now the hard part begins," said Walter Smith, executive director of the D.C. Appleseed Center for Law and Justice. "Now, we've got to figure out what they are going to do." His group has issued one study criticizing CareFirst for a lack of charitable activity, and plans another by fall suggesting possible community programs for CareFirst to support.
Byron said the board is moving ahead with its own efforts to develop plans for charitable activities.
Among the options the board will consider, she said, is creation of a foundation with surplus CareFirst funds. Blue Cross Blue Shield of Massachusetts, for example, is a nonprofit that has set up a foundation to provide grants to recipients such as local health clinics.
The CareFirst board should have its plans completed by the end of the year, Byron said.
Those who criticized CareFirst's conversion plans said they are pleased with the direction of reforms. "Everybody is moving forward in good faith, and I'm optimistic," said Del. Shane Pendergrass, a Howard County Democrat who was prime sponsor of the reform.
"The announcements are promising," said T. Michael Preston, executive director of MedChi, the state medical society. "We want to see CareFirst involved in stimulating creative approaches to financing care for those who don't have coverage."
Lawrence Mirel, the District of Columbia insurance commissioner, said yesterday that he has been largely reassured that the Maryland reforms won't harm consumers in the district, and that he had "dissolved" a hearing into the reforms.
"I found encouraging the willingness of the CareFirst board, including the new members [who joined at the beginning of the year], to work things out," he said.
Named to the overall CareFirst board were Gregory V. Billups of Waldorf, chief executive officer of Systems Maintenance and Technology Inc.; Trena Taylor Brown of Washington, former vice president of AT&T; Corp.; Loretta L. Dunn of North Potomac, vice president for government affairs, the Boeing Co.; Elizabeth Loker of Royal Oak, former vice president, The Washington Post; C. James Lowthers of Landover, president, United Food and Commercial Workers union Local 400; Kevin G. Quinn of Queenstown, owner of Wye River Capital LLC; and Kathleen M. White of Ellicott City, associate professor at the Johns Hopkins School of Nursing.
Named to the Maryland board were Giuseppe Savona of Adamstown, former vice president, UnitedHealth Group Government Programs; and Andrea M. Amprey of Finksburg, executive vice president, the KimKeli Group Inc.