Insurance regulators in Washington, D.C., have ordered health insurer CareFirst BlueCross BlueShield to provide $56 million in community health needs due to its cash reserve being "excessive," according to a Washington Post report.
Group Hospitalization and Medical Services, a wholly owned subsidiary of CareFirst, had holdings valued at $964 million at the end of 2011, which is the year the insurance commissioners were reviewing.
Although CareFirst had long claimed GHMS needed the surplus in case there was a catastrophe that caused a surge in claims and also due to the uncertainty surrounding the Patient Protection and Affordable Care Act, the District's Acting Insurance Commissioner Chester A. McPherson, who signed the order, did not agree.
Mr. McPherson ruled GHMS' surplus exceeded "the appropriate reserve level" by $268 million. After an extensive review, it was determined $56 million of the excess reserve in 2011 was "attributable to the company's activity in the District," according to the report.
CareFirst must spend the $56 million on "community health reinvestment," which may include premium reductions for D.C. policyholders and direct funding for community health programs, among other things, according to the report.