Blue Cross parent body suggests accord

Larsen, Md. legislators to talk to national group before Ehrlich acts on bill

April 24, 2003|By M. William Salganik | M. William Salganik,SUN STAFF

Maryland Insurance Commissioner Steven B. Larsen said yesterday that the national Blue Cross and Blue Shield Association suggested that if Gov. Robert L. Ehrlich Jr. signs legislation reforming CareFirst BlueCross BlueShield, the state could avoid a dispute over board changes by not implementing parts of the law.

The association had said earlier this month that the legislation might run counter to association rules on board control, and that the violation could result in CareFirst losing its right to use the familiar - and valuable - cross-and-shield trademark.

Larsen said he consulted yesterday with legislative leaders and the governor's office, and that all agreed to continue discussions with association officials in advance of May 22, the deadline for the governor to sign or veto the legislation.

Iris Shaffer, a spokeswoman, said the association would "absolutely" be willing to continue discussions. "We'd like to do everything we can to make sure CareFirst can keep those marks," she said.

The bill, passed unanimously by the General Assembly, calls for 10 CareFirst board members to be replaced this year by a nominating committee appointed by the governor and legislative leaders. Association rules prohibit any outside entity from controlling a Blue Cross plan.

The bill also prevents CareFirst from converting to a for-profit operation for at least five years, gives the insurance commissioner and attorney general power to review executive compensation, and creates an oversight committee to monitor CareFirst.

Kenneth H. Masters, the governor's legislative liaison, said, "The governor has given no indication of an inclination to veto this bill," but in making a final decision, "it's critical to know the consequences in terms of the trademark."

State officials were "encouraged" by the prospect of further dialogue, Larsen said, but "it won't be possible to keep negotiations going unless we know with greater specificity" what provisions the association believes violate its rules.

Masters, too, said, "The problem has not been clearly defined."

Shaffer said she believed that Scott P. Serota, the association's president and chief executive officer, had been "pretty open and explicit" about the group's concerns in a meeting last week with state officials. She said that while there "are other pieces that might raise red flags" of concern, the only issue that could cause loss of the trademark was that of board control.

Board control, she said, involves not just the number of board members to be replaced, but the way new members are selected. Two would be replaced next year by the board, and the legislation would add two nonvoting members to be named by legislative officers.

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