Delaware Blues plan disassociates from parent company CareFirst

The move is part of the fallout from the health plan's unsuccessful attempt to convert to for-profit status.

By Pamela Lewis Dolan — Posted Oct. 16, 2006

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Answering the two-year question of whether BlueCross BlueShield of Delaware would stay affiliated with Owings Mills, Md.-based CareFirst, the company in late September announced that it had decided not to fight the order of Delaware's insurance commissioner that the two companies part ways.

The move marked an end to a six-year saga that started with the alliance and continued with CareFirst's unsuccessful attempt to convert to a for-profit company.

The Medical Society of Delaware is applauding the commissioner's decision. "A local plan serves Delaware and its citizens better than a plan operated from a distant land," said Mark Meister, society executive director.

Insurance Commissioner Matthew Denn announced Aug. 24 that he would uphold his predecessor's 2004 decision to force the Blues plan to separate from its parent company.

Since being elected to office in January 2005, Denn placed the separation, mandated by former commissioner Donna Lee Williams, on hold to allow himself time to investigate how the separation would impact members in Delaware.

Williams ordered the separation after CareFirst, which also operates Blues plans in Maryland, the District of Columbia and Virginia, tried to convert to a for-profit company so that it could be bought by Indianapolis-based WellPoint, a move which the affected state medical societies opposed.

A law passed in 2003 by the Maryland Legislature placed a five-year moratorium on the conversion and laid the groundwork for a restructured CareFirst board. Williams was concerned that the new law would undercut Delaware's presence on the board.

But a prepared statement issued by Denn's office did not speak about the conversion issue. Instead, Denn said his decision was made after both companies refused to provide him with financial and other documents because he refused to keep them confidential.

CareFirst spokesman Jeff Valentine said the company provided Denn with more than 400 pages of documents. But he said the company refused the release of its marketing strategy plans and other sensitive information Denn wanted that "quite frankly, our competitors would love to get their hands on," he said.

Delaware Blues spokeswoman Darelle Riabov said Denn's request for financial documents was "onerous" and that releasing the information would be "both expensive and competitively damaging."

But CareFirst determined that fighting the order would be too expensive and damaging. Valentine said that although the two companies had been operating in a "successful and mutually beneficial way for the past six years," both felt that the disruption and expense of launching an appeal "wasn't worth it."

CareFirst did not receive any financial compensation for the separation because it never owned the Blues plan. "Everything goes back essentially to how it was prior to the initial affiliation in 2000," Valentine said.

Both the Blues plan and CareFirst say the disaffiliation will have no impact on the 385,000 members in Delaware. Meister agreed, saying he expects the transition to be smooth for both doctors and plan members.

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