BCBS: PHO WON'T SHARE LOSSES

Alliance Blue Cross Blue Shield's chairman and chief executive officer says MedAmerica HealthNet Inc. filed bankruptcy to avoid its share of the losses from a state insurance contract.

In a letter to the editor, John A. O'Rourke said MedAmerica HealthNet "agreed to share 50-50 in any gains or losses" through Alliance Blue Cross Blue Shield's contract with Missouri Consolidated Health Care Plan.

O'Rourke wrote: "Unfortunately, we have experienced significant losses. We view the bankruptcy filing as an attempt by MedAmerica and certain of its providers to avoid their share of the losses."

Wade C. Adams, executive director of MedAmerica HealthNet, denied O'Rourke's claim. "Our response is Blue Cross proved itself to be an untrustworthy partner and continued to promote our irreconcilable differences," Adams said Friday.

"We did not receive enough information to even confirm that there were losses with Missouri Consolidated, and the level of concern about the partnership of Blue Cross and their unwillingness to want to be our partner anymore is what caused the organization to vote to go out of business."

Adams said the threatened financial loss -- half of a projected $16 million loss on MedAmerica HealthNet's share of the Missouri Consolidated contract through 1998 -- did not prompt the network's decision to file for bankruptcy on Dec. 31.

The network, made up of six hospitals and approximately 250 physicians, is dissolving effective March 1. The individual physicians and hospitals have not filed for bankruptcy and will not be liable in any bankruptcy settlement.

Alliance Blue Cross Blue Shield announced in November that it had posted a third-quarter loss reserve of $29.5 million and a net loss of $3.5 million on its contract with Missouri Consolidated, a statewide pool of 136,000 governmental workers.

Alliance Blue Cross Blue Shield is suing Missouri Consolidated for $18 million in damages and the right to renegotiate terms of the contract.

The insurance company says Missouri Consolidated has admitted too many high-risk individuals to the pool.

O'Rourke also said that Alliance Blue Cross is contacting hospitals and physicians in the Cape Girardeau area about contracting with them.

"We are looking at all of our options, including network options, to find the best way to continue to protect our members," he wrote.

O'Rourke's letter will be published in Monday's edition of the Southeast Missourian.

Ralph Paulding, administrator of Perry County Memorial Hospital at Perryville, one of the MedAmerica HealthNet members, said his hospital already has been contacted by Alliance Blue Cross Blue Shield. "We told them we'd entertain contract proposals if they'd send them along," Paulding said.

Perry County has "a large representation" of Alliance Blue Cross Blue Shield customers, he said.

"I'm pretty confident that we'll be able to work out the details to put a delivery system, but not a network, back in place," Paulding said.

St. Francis Medical Center has not been contacted by Alliance Blue Cross Blue Shield, president and CEO James Sexton said Friday.

Sexton said he didn't know if the hospital would negotiate contracts with Alliance Blue Cross Blue Shield should they be contacted.

Wade has said Alliance Blue Cross Blue Shield failed to provide financial and utilization reports that the board needed to make management decisions.

Paulding and Sexton said Friday that they never realized the potential for loss under the Missouri Consolidated contract until Alliance Blue Cross Blue Shield announced the projected losses last year.

"We were told in May that there was a loss, and that's when we asked for substantiating information, which we did not get," Sexton said.

Paulding has only been involved with MedAmerica HealthNet since he took over Perry County Memorial two months ago.

"I reviewed minutes of the network, and I saw no indication at all prior to Blue Cross' announcement that there was difficulty providing services" to Missouri Consolidated, he said.

"Even with an audit, we couldn't validate" the losses, Paulding said. "I'm still not confident that there are the losses that are attributable to that contract."

Alliance Blue Cross Blue Shield officials say they provided all pertinent financial data, and cooperated with the audit by MedAmerica HealthNet even though they were not obligated to by contract.

The insurance company also says that the utilization data MedAmerica HealthNet wanted -- data on each individual patient enrolled in HealthNet Blue, the joint managed care program the two entities formed -- is confidential and could not be released.

The lack of information forced the network to dissolve, Paulding said, adding network members were told the financial information they wanted wasn't available and the utilization information provided "was not in a usable format."

"We were kind of handcuffed," he said.

In addition to contracting to its Alliance Blue Cross Blue Shield contract, MedAmerica HealthNet also contracts with seven other managed care organizations in the region, including Great Rivers Network, America's Health Plan, Ethics/NYL Care, Matrix, MultiPlan, ProNet and VNET.

Those agreements will remain in place until MedAmerica HealthNet's bankruptcy is completed -- an estimated 90 to 180 days after the Dec. 31 filing, said Adams.

MedAmerica HealthNet's joint venture with Alliance Blue Cross Blue Shield ended when the network filed for bankruptcy, but the providers signed a 60-day cancellation clause, which means HealthNet Blue customers can still use network providers until March 1.

Adams said providers are supportive of keeping the network in place with the other seven health plans as long as possible.

Since the network is no longer affiliated with Alliance Blue Cross Blue Shield, any contract decision will have to be made on an individual basis, he said.

Kurt N. May of Professional Benefit Design Group Inc., a Cape Girardeau brokerage, said managed care options are limited in Southeast Missouri with MedAmerica HealthNet out of the picture because there are no other complete provider networks in place.

Managed care products "will be pursuing their interests directly with providers at this time," May said.

HealthNet Blue is "a dominant portion of the privately insured market" in the region, he said.

HealthNet Blue is the managed care product marketed by Alliance Blue Cross Blue Shield through MedAmerica HealthNet. If Alliance Blue Cross Blue Shield can find another group of physicians and hospitals, the HealthNet Blue product may remain viable after MedAmerica HealthNet dissolves.

May said his firm has many questions from customers about the MedAmerica HealthNet bankruptcy. "Many people are confused, thinking that their insurance coverage will be canceled as of March 1," he said.

Alliance Blue Cross Blue Shield has assured its customers that they will have health insurance coverage after March 1 -- but the type of plan may change, depending on whether a provider network can be established.

More than 30,000 people are covered by HealthNet Blue.

Moving that many customers to a new plan is "a monumental task, a daunting task, an expensive task, one which I hope does not have to occur," May said.