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City Pushing Back Hard at CareFirst

The Committee on Public Services and Consumer Affairs voted today to investigate Group Hospitalization and Medical Services, Inc., CareFirst BlueCross BlueShield (GHMSI), and its parent company, CareFirst, Inc.

And in a second blow, interim Attorney General Peter J. Nickles has announced he is entering a lawsuit against CareFirst, trying to get the company to contribute millions in community benefits.

Looks like the council and attorney general may be teaming up to dispense some payback medicine to the health care group that just months ago dropped out of the Healthy D.C. plan. Healthy D.C. is David Catania's initiative to get health care for all city residents. He thought he was in the home stretch when CareFirst decided it wasn't going to sign on the dotted line.

Council member and committee chair Mary M. Cheh (D-Ward 3) said in a statement today that GHMSI's federal charter requires that the organization conduct itself as a "charitable and benevolent institution."

She then noted that GHMSI has accumulated more than $745 million in surplus funds and that its parent company CareFirst provided an $18 million compensation package to former CEO William Jews. That package is already being investigated by the State of Maryland's Insurance Commissioner.

Cheh said her investigation would seek to answer whether GHMSI is fulfilling its legal obligations to the public.

"District residents should know how GHMSI determines its premiums and how it spends its subscribers money," Cheh said. "There are legitimate questions about GHMSI that need to be answered."

By Marcia Davis  |  June 24, 2008; 4:45 PM ET
Categories:  D.C. Council  
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