Commitment phase

CareFirst is spending to benefit the community in a $92 million initiative at a time nonprofit plans are facing more scrutiny.

July 10, 2005|By M. William Salganik | M. William Salganik,SUN STAFF

Dr. Patricia Dubyoski spends time each day huddled in a hallway alcove at her Bel Air medical office, sorting through paperwork and stacks of patients' files.

When she needs to make a notation about follow-up care, "I put a little sticky thing on here that says, `Repeat echocardiogram in spring 2007.' "

That's about to change. Spurred by the prospect of a $100,000 payment from CareFirst BlueCross BlueShield, Dubyoski's six-doctor office is expanding its use of electronic medical records - a computer system that, among other functions, will generate electronic reminders to patients when they need to be retested. The practice, Harford Primary Care, plans to plow that money back into more technology to improve patient care.

The bonus also represents a new phase for CareFirst. The target of a stinging legislative rebuke in 2003 for its attempt to convert to for-profit operation and be sold, Maryland's largest health insurer is stepping up spending to benefit the community. Called the CareFirst Commitment, the $92 million initiative comes at a time when nonprofit Blue Cross and Blue Shield plans are under increasing scrutiny.

After several years of double-digit premium increases, along with mounting numbers of uninsured and budget pressures on state-run health programs, lawmakers and advocates have been asking whether nonprofit Blue Cross and Blue Shield plans are doing enough for their communities.

Blue Cross often holds dominant market positions and has built big cash surpluses, with the aid of years of tax breaks. (The plans are no longer exempt from federal taxes. CareFirst, like many of its peers, also pays state taxes.) State laws and Blues charters generally call for the nonprofits to act in the public good.

Besides looking at what nonprofit Blue Cross and Blue Shield plans are doing to benefit communities, some officials and advocates in other states are eyeing premium rates and accumulated surpluses to see if Blue Cross is socking away too much money.

CareFirst alone has about a billion dollars in surplus. The 38 nonprofit Blue Cross plans had $20 billion in surplus as of the end of 2003 - a 30 percent increase over the previous year, said Laurie Sobel, a staff attorney and policy analyst for Consumers Union.

"The concern has arisen in several states: Does that mean Blues plans are not meeting their charitable mission?" she said.

While there are lots of questions being raised, there is no agreement on answers - on what constitutes charitable activity, on whether Blue Cross has any legal obligation beyond its commitment to subscribers, or on how much charity is enough relative to revenue and income.

"To be candid, we're in uncharted territory," said Jonathan M. Stein, general counsel to Community Legal Services of Philadelphia, one of the groups which challenged Blue Cross surpluses in Pennsylvania as excessive. "This is ripe for litigation."

Recent efforts

Among recent efforts in which public officials have tried to define what Blue Cross plans are obligated to do:

An advocacy group, D.C. Appleseed Center for Law and Justice, challenged CareFirst's charitable efforts in the District of Columbia. In a report in December, Appleseed said CareFirst should devote 2 percent of its revenue to "community benefit" programs. The D.C. insurance commissioner held a hearing in May, ruling that CareFirst "can and should engage in more charitable activity" but didn't have a legal obligation to do so.

The four Blue Cross plans in Pennsylvania reached an agreement with the governor in February to contribute nearly $1 billion dollars over six years to a "community health reinvestment plan." The majority of the money will go to provide coverage for the uninsured; the balance to other community benefit projects. The same week, the insurance commissioner ruled that the surpluses were not excessive, but set guidelines to limit future growth.

In 2002, Hawaii passed a law capping the surplus of its Blue Cross and Blue Shield plan - but at a level well above the then-current surplus. The legislature considered, but rejected, a tighter cap this year.

Under pressure, Blue Cross and Blue Shield of Rhode Island agreed last year to cap its surplus at about then-current levels, and give back $21 million to doctors, hospitals and policy-holders.

North Carolina lawmakers considered this spring, but haven't acted on, bills that would have limited the surplus of Blue Cross and Blue Shield of North Carolina. One bill would have taken $200 million from surplus to use for coverage for the uninsured.

The chairwoman of Michigan's Senate Appropriations Committee threatened to revoke tax breaks for Blue Cross and Blue Shield of Michigan unless Blue Cross coughed up some of their surplus to help the state pay for health care for the poor. "The Blues' own financial statements say the cash surplus belongs to the residents of Michigan," Sen. Shirley Johnson, a Republican, told The Detroit News. "Well, now we want it."

Foundations expanded

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