MANY QUESTIONS AS HEALTH NETWORK QUITS

This week's reports that an insurance network involving Southeast Missouri hospitals and doctors was going out of business and had filed for bankruptcy came as a bolt for several thousand policyholders whose health-care coverage for themselves and family members is now up in the air.

When MedAmerica HealthNet Inc. was formed in 1994, it was hailed as offering the best of today's health insurance options. It was a blend of managed care and local providers who would continue to provide high-quality medical services at rates that were fair both to hospitals and doctors and to policyholders when they became ill.

In fact, the physician-hospital organization was so successful that it effectively kept other managed-care insurers from establishing much of a presence in the area. In some ways, this was regarded as a benefit to MedAmerica clients who could still pick and choose their local health-care providers at negotiated rates that offered significant cost savings. And the hospitals and doctors were able to protect their fees by joining the partnership created to make the plan work.

The overall effort may have been too successful, at least in the eyes of federal antitrust agencies which began an investigation into complaints from would-be competitors in the managed-care field. No conclusions have been reached as a result of that probe. And, as is customary with federal investigations, the agencies involved won't even confirm that the inquiry is still active.

The root of MedAmerica's financial problems appears to be agreements that involve Alliance Blue Cross Blue Shield, the insurance provider, and Missouri Consolidated Health Care Plan, a menu of health-care options -- including MedAmerica -- available to workers employed by government agencies. At issue are losses incurred by Alliance due to its Missouri Consolidated benefits program, losses Alliance says must be shared by MedAmerica, at least to the extent those policies were marketed by MedAmerica.

MedAmerica, by and large, represents little more than a set of negotiated rates with doctors and hospitals, plus a marketing effort to sell group insurance coverage.

By seeking bankruptcy protection, MedAmerica hopes to avoid having to pay any of Alliance's losses. And, in the meantime, if there is a meeting of the minds between MedAmerica and Alliance, MedAmerica could continue operating without a huge liability hanging over its head. Barring such an accord, MedAmerica is counting on a bankruptcy judge to keep from having to share the losses, estimated to be some $16 million so far.

Meanwhile, all of this jockeying does little to give MedAmerica's customers any peace of mind. In fact, they may feel like pawns in a chess game whose consequences will rely on contract settlements, lawsuits and the goodwill of the major players. And those same folks who thought they had a good health-insurance plan also are wondering why the physicians and hospitals who put up nearly $1.5 million to create MedAmerica and then became the plan's primary providers didn't have a better handle on MedAmerica's slide into bankruptcy.

These and many other questions don't have immediate or simple answers. Those involved are fearful of discussing the situation in depth because of negotiations and the potential for more lawsuits.

Whatever the outcome of all this, it is quite likely that businesses who signed up their employees for MedAmerica's plan will be a little wiser in negotiating future health-care coverage.