MEDAMERICA SEEKS TRADEOFF

MedAmerica HealthNet Inc., has filed a liquidation plan for its pending bankruptcy.

The Cape Girardeau-based physician hospital organization indicated in court documents Monday that it wants to trade its anticipated share of a judgment against Missouri Consolidated Health Care Plan in exchange for settling its contractual obligation with Alliance Blue Cross Blue Shield.

The PHO announced Monday that it is dissolving.

MedAmerica HealthNet, a network of some 250 physicians and six hospitals in Southeast Missouri and Southern Illinois, and Alliance Blue Cross Blue Shield joined forces in 1994 to offer the managed care product HealthNet Blue.

In the meantime, Alliance Blue Cross Blue Shield officials say they are "working furiously" to make sure HealthNet Blue customers have health insurance coverage once MedAmerica HealthNet goes out of business March 1.

"One option is to keep the HealthNet Blue product viable," said Randy Ressel, vice president of sales. Other managed care options may also be made available, he said.

HealthNet Blue "to date has been our most popular product down there," Ressel said.

Wade C. Adams, MedAmerica HealthNet's executive director, said projected losses caused by a contract with Missouri Consolidated Health Care Plan, which covers some 136,000 municipal and governmental workers and their families, forced the network to file for bankruptcy.

MedAmerica was informed by Alliance Blue Cross Blue Shield that it would be liable for half of $16 million in projected losses for HealthNet Blue through the Missouri Consolidated contract.

Alliance Blue Cross Blue Shield's publicly-held managed care arm, RightChoice Inc., is suing Missouri Consolidated for $18 million in damages for losses on the contract.

The lawsuit is pending. Adams said Tuesday that MedAmerica wants to cede its share of the settlement expected against Missouri Consolidated in that suit to settle its outstanding debts with Alliance Blue Cross Blue Shield.

Clara Webb Kinner, a spokeswoman for Alliance Blue Cross Blue Shield and RightChoice, said she couldn't comment on MedAmerica HealthNet's plan until officials have a chance to review the documents.

Adams has said that Alliance Blue Cross Blue Shield did not supply the network with financial information or accounting statements and that the network was not fully informed of the potential risk involved in the Missouri Consolidated contract.

But Alliance Blue Cross Blue Shield said that isn't true.

Ressel said MedAmerica HealthNet was "enthusiastic" to pursue the contract with Missouri Consolidated once they "became aware of the huge presence of Missouri Consolidated" in the state.

The contract offered a "very great market potential" for MedAmerica HealthNet, Ressel said, and the network offered to lower its rates to win the Missouri Consolidated contract.

Ruth Meyer Hollenback, vice president of network management, said Alliance Blue Cross Blue Shield provided financial statements and reports regularly, as required by law, and cooperated in an audit commissioned by MedAmerica HealthNet.

"We've worked diligently with MHI to give them information," she said.

The documents filed Monday include an outline of the corporation's assets and liabilities and its plan on how to pay off its creditors -- including Alliance Blue Cross Blue Shield.

Adams said the individual members of the network -- the physicians and hospitals -- will not be liable for any part of the bankruptcy settlement.

Hollenback also said Tuesday that Alliance Blue Cross Blue Shield never asked network physicians to pay any part of the 1996 deficit from the Missouri Consolidated contract.

"That's an obligation of MHI, the organization," she said.

Ron Meyer, director of the Missouri Consolidated Health Care Plan, said MedAmerica HealthNet had a chance to rebid the Missouri Consolidated contract last year, but didn't.

Meyer said MedAmerica HealthNet's decision leaves approximately 8,700 of his organization's clients wondering about their health-care plan.

Meyer said he is waiting to hear from Alliance Blue Cross Blue Shield on what their options will be.

Adams, Ressel and Hollenback all indicated Southeast Missouri will remain a viable market for managed care.

Ressel said that the medical community "in general" has not been receptive to managed care, but some individuals are "willing, ready and able to go."

Adams said it is possible that a new PHO similar to MedAmerica HealthNet may form sometime in the future.

"As of today there are no plans to do that, but that's not to say that something might not occur in this town," he said.

THE BALANCE SHEET

MedAmerica HealthNet

ASSETS:

Current Assets: $78,017.23

Fixed Assets: $37,197.26

Org. costs: $147,277.35

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Total Assets: $262,491.84

LIABILITIES AND EQUITIES:

Liabilities

Accounts Payable: $27.72

Total liabilities: $27.72

Equity

Paid in capital

SEMO IPA $22,029.74

Dexter Mem. Hosp. $25,845.20

Mo. Delta Med. Ctr. $193,452.74

Perry Co. Mem. Hosp. $78,545.26

St. Francis $518,464.65

Southeast Mo. Hosp. $632,741.89

Retained earnings -$930,048.95

Net income -$278,566.41

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Total equity $262,464.12

Total liabilities and equity $262,491.84