CareFirst may lose its Del. unit

Ruling could force Blues there to split from Md. firm

August 25, 2006|By Hanah Cho | Hanah Cho,Sun reporter

Delaware's insurance commissioner has rejected the latest plan for modifying the affiliation between CareFirst BlueCross BlueShield and its Delaware subsidiary.

The decision, released yesterday, could cause Blue Cross Blue Shield of Delaware to split from CareFirst, ending a relationship that began in 2000.

CareFirst, which has its headquarters in Owings Mills, has about 300,000 members in Delaware and 3.1 million in Maryland and the District of Columbia.

If the separation happens, it will have no bearing on Maryland consumers or CareFirst operations, said R. Steven Orr, the Maryland insurance commissioner. "Basically, the bottom line is Delaware will go off on its own, and Maryland and D.C. will continue to operate," Orr said.

In a statement yesterday, Blue Cross Blue Shield of Delaware said Delaware Insurance Commissioner Matthew Denn's order would have no impact on its customers, members, providers or business partners.

The order takes effect in 60 days unless Delaware Blue Cross files a court appeal, which automatically delays it. Officials at CareFirst and Delaware Blue Cross refused to comment beyond the prepared statement of the Delaware Blues.

Denn's decision is the latest development in a dispute that goes back to 2003, when Maryland blocked nonprofit CareFirst's attempt to convert to a for-profit operation.

Maryland legislators imposed new operating rules on the insurer, and Delaware regulators worried that their state's consumers might be hurt.

Ever since, the two corporate boards and two insurance commissioners have been trying to work out a method of operating that satisfies all parties.

In 2004, Donna Lee Williams, then Delaware's insurance commissioner, ordered the Delaware Blues to split from CareFirst and become an independent insurer. She held that the new rules imposed on the parent company would not serve the best interest of subscribers in her state.

A year later, Denn agreed to put the separation order on hold to review a proposal that would grant Delaware Blue Cross more independence under a contractual affiliation.

Orr, the Maryland insurance commissioner, approved in June CareFirst's request to change its affiliation with Delaware Blues to a contractual one.

In the ruling, Orr said the new relationship between CareFirst and Delaware Blues is "fair and reasonable" and would not be "contrary to the public interest."

But Denn rejected the plan Orr had approved, saying the insurers had refused to comply with his request for documents.

"The department will not be bullied into making a decision that has implications for the health care of tens of thousands of Delawareans without adequate information to make that decision in a responsible manner," Denn wrote.

The Delaware Blues said the commissioner's request for documents would be "expensive and competitively damaging."

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