JUSTICE SEEKS DATA ON PHO; MEDAMERICA CHIEF ACKNOWLEDGES PROBE

The U.S. Department of Justice has asked MedAmerica HealthNet for information, MedAmerica's executive director said.

Wade C. Adams said Tuesday that federal investigators contacted him last week to try to determine how the physician-hospital organization, marketed locally in conjunction with Blue Cross Blue Shield as HealthNet Blue, has affected competition in Southeast Missouri.

"We don't know a lot of the details at this point because they've only issued the request for information," Adams said.

The network is cooperating, he said, adding each of the hospitals in the network also had been contacted by the Justice Department.

Adams said investigators have asked for information dating back to 1993, when the PHO was being formed, to the present.

He called the request for information "boilerplate," and said it was not apparent from the information requested so far what specifically investigators are looking for.

MedAmerica HealthNet is made up of five hospitals in the region, including St. Francis Medical Center and Southeast Missouri Hospital in Cape Girardeau, plus more than 200 area physicians. It provides health insurance for approximately 24,000 people.

A Justice Department spokeswoman said she could not comment on the inquiry.

In May, the trade journal Modern Healthcare published a report that the network was under investigation by state and federal authorities for possible antitrust violations.

Adams said he doesn't know what prompted the inquiry. "It's possible someone did report us or complain, but there's no indications of that in any of the documents," he said.

Business owners in the area have complained that health insurance costs are higher in Southeast Missouri than in other regions of the state or nationally.

MedAmerica HealthNet Blue offers discounts on medical services to employers who use the doctors and hospitals in the network.

Humana Health Care Plus last year designated Southeast Missouri Hospital as its local provider when it was unable to contract with either Cape Girardeau hospital for managed care. St. Francis Medical Center began offering families covered by Humana discounts in response.

Jeff Andersen, Humana's associate executive director, said the company has had a number of discussions with MedAmerica HealthNet regarding establishing a managed care service, but "we really never got very far. They weren't interested in working with managed care. It takes two to do an agreement."

Andersen said Humana has also received a request for information with the Justice Department and is cooperating with the inquiry.

He denied that Humana officials prompted the investigation because the company has not been able to establish a managed care network in the region.

"Humana's not behind the investigation," Andersen said. "It's kind of funny because people ask us all the time about it. We don't know any of the details."

John Mehner, president of the Cape Girardeau Chamber of Commerce, said the chamber's board of directors met Tuesday morning with businesses about health insurance providers in the area.

"We listened to presentations from businesses this month, and I assume we'll hear presentations from HealthNet Blue and others next month," he said, adding he could not comment on the nature of the discussion Tuesday.

"Right now we're just in a fact-finding mode," Mehner said.

There has been speculation among business owners and health-care providers in the area that MedAmerica HealthNet is under investigation for denying access to the network of physicians and hospitals by insurers other than Blue Cross Blue Shield.

But Adams said the network contracted with three new providers last week, and is in discussion with other insurance companies for setting up 10 new products.

The network is also in discussion with two other hospitals interested in joining, Adams said.

Andersen said doctors and hospitals in the region aren't interested in managed care.

"A large majority" of Humana members in the Cape Girardeau area are sending their employees to hospitals and doctors outside the area because they can receive discounted care in other communities, he said.

The members could choose to use Cape Girardeau services, he said, "but financially it makes more sense to go outside of the community because of the cost constraints."

The difference in costs is staggering, Andersen said.

Jim Wente, administrator at Southeast Missouri Hospital and vice chairman of MedAmerica HealthNet, said his hospital contracts with about half a dozen managed care providers outside the MedAmerica network.

"We've offered to contract with Humana through the PHO, but we just weren't able to get that done," he said.

Members of MedAmerica's board of directors are Dr. David Westrich, chairman; Wente; Patrick Bira, treasurer; Dr. David Kapp, secretary; and John Fidler, Charles Ancell, Dr. Sarah Aydt, Dr. Russell Felker, Dr. Ron Hill, Randal Tennison and Dr. Bill Shell.