CareFirst BlueCross BlueShield (CareFirst) is the leading healthcare payer in Maryland, the District of Columbia, and Northern Virginia, with a market-leading footprint in the employer and individual market. In 2020, CareFirst entered Medicaid through the acquisition of two Medicaid plans in Maryland and the District of Columbia. The motivation to pursue Medicaid was best articulated by CareFirst’s Chief Executive Officer Brian D. Pieninck: “Our unique not-for-profit mission calls on us to provide access to affordable health coverage and to support public and private initiatives that provide coverage for the individuals and families in the communities we serve. We want to help people meet healthcare needs at every stage and in every circumstance of life.”

In addition to its entry into Medicaid, CareFirst also entered Medicare Advantage in Maryland in 2021. CareFirst’s big bet in government programs has provided it with an opportunity to expand its reach, serve the community and evaluate and transform its operations from a commercial-oriented payer to a payer serving multiple constituencies through a variety of offerings.

To learn more, Oliver Wyman chatted with CareFirst BlueCross BlueShield to better understand their journey to expand program offerings into Medicaid and where they see new opportunities to innovate emerging.

Q&A with CareFirst BlueCross BlueShield

Rahul: Walk me through the past 18 months or so. Looking back, how would you describe your journey making a foray into Medicaid and working on two acquisitions?

Vickie: It's been enlightening, interesting, and challenging. It is important to us as an organization that we embody the ethos of our mission and serve all members in our community regardless of their age, income, or background.  While the acquisition and integration of the two Medicaid plans in very short order was certainly challenging, the situation was further complicated by the pandemic.

COVID-19 did, however, reinforce the need for us to serve members through a variety of programs; deepen our understanding of the challenges our community was experiencing meeting their healthcare needs; and alleviate the socioeconomic barriers to access care. As an organization, we are glad we took on that mantle during a time of such great need.

Cindy: I agree, CareFirst has very strong ties in the community and the acquisition of these Medicaid plans has also enabled us to directly serve a greater portion of our community.

From an acquisition and integration standpoint, there were several moving pieces that we had to manage simultaneously. For example, as we were working to integrate the DC Medicaid plan, we were also responding to an RFP from the District. Imagine trying to respond to an RFP for a health plan that you’ve just acquired. Looking back, it was a bit of a wild ride but it also provided us an opportunity to work hand-in-hand with our new associates from the DC Medicaid plan starting Day 1. If I knew at the start all that we would need to accomplish simultaneously, in a short time, I would've thought there’s no way we can get all that done – acquisition and integration of two Medicaid plans while responding to an RFP, but we did and I’m glad we did!

Before we started, I would've thought, “There's no way we can get all that done – acquisition and integration of two Medicaid plans while responding to an RFP,” but we did.

Rahul: That's great to hear. Tell us more about your work with the government. You’ve been involved, for example, on the Affordable Care Act side. And now, you’ve entered heavily regulated government programs. Historically, CareFirst has been a commercially dominant plan in some segments of the market. What has it been like working with government programs and regulators?

Cindy: We're used to working with many different regulators and value these relationships – such as the District of Columbia Department of Insurance, Securities and Banking, the Maryland Insurance Administration, the Virginia Bureau of Insurance, our state-based marketplaces, and the Office of Personnel Management and Department of Health and Human Services at the federal level – so that part wasn't new.

However, as we’ve heard throughout the journey – and now I fully understand why– doing Medicaid in one state is very different from doing it in another. So, the regulatory diligence in this space and across the board is immense.

Vickie: To piggyback on that, the regulatory relationship in government programs is a different type of relationship than with our commercial plans. In the ACA marketplaces, there is a great deal of connection with regulators.  However, Medicare Advantage and Medicaid regulator relationships are with different entities in federal and state government. The relationships you have to build and cultivate with the regulatory agencies for both Medicaid and Medicare Advantage are critical to the success of your programs.

Rahul: How did you support the regulatory approval process while balancing the onboarding of members and associates into the broader CareFirst organization?  

Vickie: It was different depending on the segment, but let's start with the DC plan. That was a small, privately owned plan.

We have a significant presence in the Mid-Atlantic region, so we had broad connections to the community in the District before this acquisition. So, it was about ensuring that even though we had this acquisition in place, that local presence would continue to be front and center.

When you look at the Maryland acquisition, CareFirst has been in Maryland for a long time. So, there were strong relationships with our regulators, which gave us credibility when working with them in this new area. At that point, we needed to ensure there would not be disruption to our new members or the provider network. It was very important for them to understand things were going to continue seamlessly from a member and provider standpoint.

Cindy: Echoing everything Vickie said, one other regulatory piece is the difference between government programs and commercial plans. There's much more scrutiny on the vendors we utilize and the associated regulatory requirements – from vendor selection/vetting through ongoing management, especially for Medicare. We needed to establish a framework for the oversight of first-tier downstream and related entities (FDRs) for Medicare and delegated entities for Medicaid.

Parie: Going beyond regulators, tell us more about how you’re serving the needs of different patient populations.

Cindy: There is a lot of movement between highly subsidized ACA plans and Medicaid enrollment.  Also, it is not just about having services available, but also about getting services to people. For example, in DC, we have brick-and-mortar wellness centers in the community for our Medicaid members. Although these onsite services have been impacted by the pandemic, having those services available, where our members live, is critical.

We're also now partnering with Cityblock to provide personalized care for members with complex health issues. Their unique model brings care to Medicaid members in their neighborhood settings.

Vickie: As we build out capabilities for government programs we have been evaluating how we can best serve and meet the needs of our newly acquired enrollees & members. We’ve found that as we pull back the layers of our existing commercial members, many of our employer-sponsored accounts are very diverse and have members with different backgrounds and different healthcare needs which aren’t too different from the Medicaid population. There are a lot of similarities between these groups, so we’re looking to bring the best of what each individual acquired plan had to offer with the best of what CareFirst has to offer.  And, as we refine some of these services and offerings, we’ll want to make sure that translates back to our commercial members as well.

Rahul: Let’s pull on this thread a little bit more. The two Medicaid plans were inherently different compared to the CareFirst organization. One was a provider-sponsored plan while the other was a private equity-owned start-up. Now, it seems like all functional areas are getting comfortable with how these pieces come together within CareFirst. On that note, how has your organization’s culture evolved?

Vickie: Our culture is still evolving. It’s important when you do any type of acquisition to respect the structure that was in place before the acquisition took place and that you respect the culture and the people. You also have to look at what the other organization brings to the table and understand how and why it is different from what you do today. Ultimately, we have to build on the best from each world. 

It’s important when you do any type of acquisition to respect the structure that was in place before the acquisition took place.

Rahul: When you think about Medicaid in DC and MD, what do you envision happening over the next three to five years?

Vickie: We’re looking to grow both CareFirst BlueCross BlueShield Community Health Plan District of Columbia and CareFirst BlueCross BlueShield Community Health Plan Maryland.  I also will be evaluating how to leverage synergies between these acquisitions.

Cindy:  In working with Oliver Wyman and analyzing overlapping functions and capabilities across the three organizations – how DC Medicaid works, how MD Medicaid works and how do they fit in with the broader CareFirst organization, we’ve identified about 30 to 40 opportunities to streamline overlapping capabilities. We're now moving forward with those opportunities and are working to begin or continue that process. And, we’re working with the larger CareFirst organization on streamlining across the enterprise to consolidate platforms.

Parie: You’ve accomplished a lot in a short time. I know one thing we're seeing in the industry is the link between the exchange population and the Medicaid population. Now that you have both, are there plans for CareFirst to link them together?

Vickie: Now that we participate in Medicaid in Maryland and the District, our next step is to see how we can effectively manage this movement and ensure things are seamless. We're not there yet. That's something we're going to have to evaluate, to be perfectly honest. This is something, however, we will be evaluating over the next year or so to see where we can get the effectiveness as people are transitioning between ACA plans and Medicaid.