Bankruptcy Court Judge Allows Health Plan of the Redwoods To Exit Medicare+Choice in October
U.S. Bankruptcy Court Judge Alan Jaroslovsky ruled Wednesday that Health Plan of the Redwoods may not exit the Medicare+Choice program on Aug. 31, as it requested, and must continue to provide coverage until Oct. 31, the Santa Rosa Press Democrat reports. Although HPR estimates it is losing about $1 million per month because of its participation in the Medicare+Choice program, Jaroslovsky said the health plan "is solvent, or nearly so," and will be able to bear the losses (Rose, Santa Rosa Press Democrat, 7/18). Faced with an $8 million budget deficit since Jan. 1, HPR filed for federal Chapter 11 bankruptcy protection on May 31. As part of a reorganization plan, HPR asked the bankruptcy court for early release from the health plan's Medicare+Choice contract. In earlier testimony, HPR CEO Rod Stroud said that the health plan could avoid a $4.5 million loss if it drops its Medicare HMO, called MediPrime, by the end of August rather than at the end of the year, which it could have done without court approval (California Healthline, 7/16). Although "disappointed" that the judge rejected the August release, Stroud said that "an October date is not unreasonable."
Jaroslovsky ordered the health plan to give its members at least 90 days notice of its intention to leave the plan. HPR officials said they were preparing notices for their members, but a mailing date has not been set. Once beneficiaries receive the letters, they will have 123 days to shift coverage to a Medigap program without being required to undergo a physical exam or disclose any pre-existing conditions. Kaiser Permanente, which operates the only other Medicare+Choice program in the area, has stopped taking applications because it has reached its limit of 600 new members. Advocates for seniors "hailed" the ruling because it gives seniors three months to find other coverage, the Press Democrat reports (Santa Rosa Press Democrat, 7/18).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.