O'Reilly pressured Donaho Senator pressed Md. insurance chief on friend's proposal STATE HOUSE REPORT

April 01, 1993|By John W. Frece | John W. Frece,Staff Writer

State Sen. Thomas P. O'Reilly, the powerful chairman of the Finance Committee, has been pressuring Maryland's insurance commissioner to act on a proposal that would benefit a private firm represented by Mr. O'Reilly's political and personal friend, lobbyist Gerard E. Evans.

The pressure came as bills of vital importance to the commissioner were pending before Mr. O'Reilly's committee. One bill would assure accreditation of Maryland's commercial insurance industry and the other would strengthen oversight of Blue Cross and Blue Shield of Maryland.

Mr. O'Reilly acknowledged yesterday that over the past two months he has both written and telephoned Insurance Commissioner John A. Donaho urging quick action on a request by Blue Cross that, if approved, would directly enrich Mr. Evans' client, InforMed Physicians Services Inc.

"Senator O'Reilly discussed InforMed with me," Mr. Donaho said. "I told him we were moving to evaluate the matter on as timely a basis as we could, that we've asked for information from Blue Cross and were awaiting a reply."

Asked whether he felt Mr. O'Reilly's intervention was proper, Mr. Donaho replied: "No comment."

Mr. O'Reilly said his friendship with Mr. Evans, which dates to the late 1970s and is rooted in the rough-and-tumble of Prince George's County Democratic Party politics, has nothing to do with his actions on InforMed. Rather, he says, he became involved in the issue because he believes strongly in the "managed care" approach to controlling health care costs that the Blue Cross/InforMed proposal would establish.

InforMed, a Baltimore company founded in 1989, collects and analyzes data about medical procedures and charges. Participating doctors pay InforMed to have their practices compared with those of their peers in an effort to help the doctors control their own costs and eliminate unnecessary procedures.

Blue Cross officials say it is the wave of the future.

Blue Cross wants to set up a network of physicians who will agree to work with InforMed to keep costs down. But to entice them to join, Blue Cross wants to offer an incentive: reimbursement at a rate 5 percent higher than the "usual and customary" fees the nonprofit insurer pays other doctors.

Blue Cross has told the state Insurance Division that more than 1,200 physicians have already signed up and that the increase in fees would cost about $2.5 million. Blue Cross predicts the InforMed program would generate an estimated $10 million in savings that would more than offset that cost.

If Mr. Donaho allows the Blues to pay the incentive fees, doctors who participate would be required, in turn, to divert 1.5 percent of the increase to InforMed. Mr. O'Reilly said he was unaware that the InforMed proposal involved fee increases.

To represent its interests in Annapolis, InforMed hired Mr. Evans, whose close relationship with both Mr. O'Reilly and Senate President Thomas V. Mike Miller Jr., D-Prince George's, dates back 15 years to when Mr. Evans was staff attorney to a Senate committee on which both legislators served. Mr. Evans also chairs the Prince George's Democratic Party, in which the two senators are active players.

He is a registered lobbyist for 23 companies, including InforMed.

Mr. O'Reilly's personal interest in the Blue Cross/InforMed request bubbled to the surface last week. That's when aides to Gov. William Donald Schaefer and the state's commercial insurers became alarmed that Mr. O'Reilly's committee was holding hostage the insurance accreditation bill as a way of pressuring Mr. Donaho to act on the Blue Cross/InforMed request.

During the week, Mr. O'Reilly telephoned Mr. Donaho to inquire about the status of the proposal. He said he complained the commissioner had been dragging his feet on the Blue Cross request and demanded a reply. If necessary, he warned, he would amend the insurance accreditation bill to make certain that an InforMed-type program could be set up in Maryland.

With the session nearly over, administration officials worried that tagging the accreditation bill with such an amendment could kill it.

"That would be a disaster for the industry," said Mr. Donaho, who said if the bill imposing higher regulatory and solvency standards were to die, Maryland-based insurers might be forced to move to another state.

On Tuesday, the Finance Committee relented and passed the accreditation bill, although the legislation imposing tighter standards on Blue Cross is still awaiting a committee vote. Mr. O'Reilly says he may add an InforMed-type amendment to another controversial bill to reform the state's health insurance system.

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