Looking for a leader who could help it navigate an increasingly technology-centered health care world, CareFirst BlueCross BlueShield yesterday tapped the head of an electronic claims-processing firm to be its new president and chief executive officer.
Chester "Chet" Burrell, 60, is currently chairman and CEO of Indianapolis-based RealMed Corp., which provides claims services for insurers - including CareFirst - and doctors. He previously founded and led Novalis Corp., a health technology and consulting firm. He's also familiar with the Blue Cross world, having served as an executive of Blues plans in New York and Indiana.
He takes over the state's largest health insurer Dec. 1. Burrell could not be reached for comment yesterday, either at RealMed or through CareFirst.
In announcing the appointment, Michael R. Merson, chairman of CareFirst's board, said improvements in technology are a "pillar" of CareFirst's strategic plan. CareFirst's competitors, such as UnitedHealthcare and Aetna, Merson said, are already moving aggressively in that direction.
"Health information technology is a major frontier," said Jonathan Weiner, professor of health management and policy at the Johns Hopkins University's school of public health.
"What will distinguish the winning companies from the others is their ability to move beyond bill-paying" into such areas as secure individual medical records, reporting on the quality of doctors and hospitals, and clinical decision support, Weiner said.
CareFirst's current technology has run into some high-profile trouble lately. The company conceded that its highly touted "consumer-directed" plan, designed to reduce premiums by offering coverage with high deductibles, wasn't tracking deductibles properly, causing members to be billed for services that CareFirst should have paid for.
Also, the insurer was fined $125,000 this week by the Maryland Insurance Administration for being late in its claims denials more than 17 percent of the time. In its report on CareFirst claims problems, the MIA noted that CareFirst is using three different claims systems, the oldest (and the one with the highest error rate) dating from 1981.
"It's no secret that CareFirst has had separate IT platforms that don't connect and don't function properly," said Calvin M. Pierson, president of the Maryland Hospital Association.
Pierson, whose organization has often been at odds with CareFirst, will now be dealing with an old friend.
"We spent the first five years of our careers sitting next to each other," Pierson said, working on health policy in the New York State budget office. He said Burrell has "a great background in health care - he clearly has the credentials."
Merson said the new CEO had been the unanimous choice of a seven-member search committee and of CareFirst's board.
However, he said, the selection had been "a photo finish" between Burrell and David D. Wolf, who has served as interim CEO for the past 10 months. Wolf will resume his position as executive vice president of CareFirst.
Merson said the search firm Korn/Ferry International had found 23 candidates for the post, and the search committee had narrowed that to five finalists, then to Burrell and Wolf.
They were seeking a CEO to replace William L. Jews, who left at the end of last year in what Merson described as a "mutual decision."
Jews came to what was then Blue Cross and Blue Shield of Maryland in 1993, at a time when the company was facing insolvency. He rebuilt it and engineered combinations with the District of Columbia and Delaware Blues plans that reshaped CareFirst as a prosperous regional insurer.
Then, however, Jews attracted criticism for a 2001 deal to convert the company to a for-profit operation and sell it for $1.3 billion. Jews would have collected $39 million in bonuses, deferred compensation and retirement benefits if he left the company then. The state insurance commissioner blocked the deal in 2003, saying the bonuses had tainted CareFirst's decision on whether and how to sell.
The legislature removed most of CareFirst's board - Merson was chosen by a state nominating panel to step in - and locked in the company's nonprofit status for five years.
Merson said the strategic plan "absolutely" called for CareFirst to remain true to its nonprofit mission. He said the plan also didn't call for any geographic expansion, although he said CareFirst is looking to restore a full affiliation with the Delaware Blues plan. The Delaware plan officially severed its affiliation a year ago, but still contracts with CareFirst for management.