BC, MEDAMERICA SETTLE; LOCAL NETWORK ESCAPES LIABILITY FROM LOSSES

An agreement between Alliance Blue Cross Blue Shield and MedAmerica HealthNet Inc. stipulates that the local network won't be liable for losses on a state health insurance contract.

The settlement also stipulates that all of the doctors and hospitals contracted with MedAmerica HealthNet for the HealthNet Blue product will contract directly with Alliance Blue Cross Blue Shield until at least Oct. 1.

Originally, provider contracts were scheduled to end March 1.

MedAmerica HealthNet Inc., which filed for bankruptcy Dec. 31 because of the projected liability on the Missouri Consolidated Health Care Plan contract, will go through with its liquidation, said Wade C. Adams, executive director of the network.

"The settlement was made in context with the liquidation," he said.

"We're pleased that we can extend services to patients, that services to the region will continue uninterrupted," Adams said. "I think it's a fair and equitable situation.

MedAmerica HealthNet was informed late last year that it would be liable for half of the losses on its share of the Missouri Consolidated contract, estimated at $16 million through the end of 1998.

RightChoice Inc., the managed care arm of Alliance Blue Cross Blue Shield, and Missouri Consolidated are suing each other over the contract losses. RightChoice is seeking to renegotiate terms of the contract and is asking for damages, while Missouri Consolidated wants the insurance company to stand by the original agreement.

Under terms of its settlement with Alliance Blue Cross Blue Shield, MedAmerica HealthNet is giving up any claim to damages RightChoice might win in its lawsuit against Missouri Consolidated.

Some 30,000 people in Southeast Missouri are covered by the HealthNet Blue product.

Alliance Blue Cross Blue Shield officials say terms of the new agreement are the same as the agreement with MedAmerica HealthNet.

Doctors will receive the same reimbursement, and patients will make the same co-payment under the new agreement. The HealthNet Blue product will still be available.

The settlement, signed Wednesday night and announced Thursday, still has to be approved by a federal bankruptcy judge.

Adams said court motions have been filed to make the settlement part of the network's liquidation. A hearing is set Wednesday on the motion.

Randy Ressel, vice president of sales for Alliance Blue Cross Blue Shield, called the settlement "a relief."

The insurance company had been faced with moving the 30,000 HealthNet Blue customers to a different plan within a 90-day timeframe, a monumental task.

Alliance Blue Cross Blue Shield informed its brokers last week that they were working on the settlement. The formal announcement was delayed as attorneys for both parties worked out details of the agreement.

The settlement is hailed as a "win-win" situation for all the parties involved: the insurance company, the providers and the patients.

"We wanted to look out for out members and we wanted to make sure they had continuity of care," Ressel said. "The most expedient way to do that was to go about the process of obtaining the contracts from MedAmerica HealthNet."

Earlier this month Alliance Blue Cross Blue Shield filed a motion asking the court to make MedAmerica HealthNet members -- the doctors and hospitals -- contract directly with them, in effect taking over the network. MedAmerica HealthNet filed a counter motion.

That's when negotiations began on the current settlement, Adams said.

"In the discussions on those two motions, we both agreed we should sit down and see if there was some resolution we could come to that would best serve the parties and the patients and the providers," he said.

In effect, the network will remain in place, if individual providers decide to continue their contracts with Alliance Blue Cross Blue Shield after Oct. 1, even though MedAmerica HealthNet will have dissolved by that time.

Ressel said he expects most of the providers to opt to continue their contracts after Oct. 1.

"I see no reason why they wouldn't," Ressel said, pointing out the providers are under the same contract they had with MedAmerica HealthNet.

Randy McConnell, a spokesman for the Missouri Department of Insurance, said the settlement "appears to address" the state's concern of continued coverage for HealthNet Blue customers.

Ralph Paulding, administrator of Perry County Memorial Hospital, said his hospital will continue its relationship with Alliance Blue Cross Blue Shield "as long as they're in the region."

He said he is "pretty confident" the settlement will be approved.

Ressel said Alliance Blue Cross Blue Shield hopes the providers now affiliated with MedAmerica HealthNet -- some 250 physicians and six hospitals -- will opt to contract with the Alliance preferred provider organization, which now has about 10,000 members in Southeast Missouri.

Three area hospitals -- Missouri Delta, Dexter Memorial and Perry County Memorial -- are already part of the Alliance PPO, which has provider members all over the state.

Neither Cape Girardeau Hospital is currently a member, he said, but negotiations are in place "and seem to be going well," Ressel said.

Neither James Wente, administrator of Southeast Missouri Hospital, nor James Sexton, president and CEO of St. Francis Medical Center, could be reached to comment.

Alliance Blue Cross Blue Shield is also in the process of developing a non-gatekeeper health maintenance organization for the region, Ressel said.

The continuation of HealthNet Blue, the possible expansion of the Alliance PPO and the new HMO will give employers and employees a wider range of options for health-care coverage, he said.