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DISB Orders CareFirst to Issue Rebates with Excess Surplus

Wednesday, August 31, 2016
Commissioner’s order provides plan for dedicating $51.3 million in excess surplus to subscribers

Washington, D.C. – Commissioner Stephen C. Taylor of the District of Columbia Department of Insurance, Securities and Banking (DISB) issued a final Decision and Order in the 2011 Surplus Review and Determination for Group Hospitalization and Medical Services, Inc. (GHMSI), a nonprofit hospital and medical services corporation which operates as CareFirst in the District.

The Commissioner’s August 30 order is the final action to implement a 2014 decision by the former DISB Acting Commissioner who found that GHMSI’s 2011 surplus of $963 million was excessive and that $56.2 million of the excess surplus was attributable to the District. In this order, Commissioner Taylor determined that approximately $4.9 million in rate reductions qualified as community health reinvestment and ordered GHMSI to issue the remaining $51.3 million in excess surplus in the form of rebates to their subscribers.

“Throughout this process, DISB was focused on reaching a result that was fair and equitable and protected District residents and our health insurance market,” said Commissioner Taylor. “We are thankful to the public for their input and feedback, which played a critical role in this final decision.”

On June 14, 2016, Commissioner Taylor rejected the plan filed by GHMSI because it did not provide for the distribution of the excessive surplus to community health reinvestment, as required by the 2014 decision. Further, the Commissioner asked for public comment as he developed a new plan to dedicate the excess surplus to community health reinvestment.

After a careful review and analysis of public comments, Commissioner Taylor determined that rebates would promote and safeguard public health by providing an immediate benefit to GHMSI subscribers that can be used to assist them with the payment of insurance premiums and other health care expenses, such as deductibles, co-pays, coinsurance and other out-of-pocket costs.

The freeze on premium rate increases requested by GHMSI, which is mandated by law, will remain in place until the company issues the rebates.

The Commissioner is required by law to review GHMSI’s surplus (the amount by which its admitted assets exceed its liabilities, including reserves) at least once every three years to determine whether it is excessive. Upon finding excess surplus, the Commissioner is required to order GHMSI to submit a plan that dedicates the excess surplus attributable to the District to community health reinvestment in a fair and equitable manner.

To view the order, follow this link. To view all documents related to the 2011 GHMSI surplus review, visit this link.