CMS Officials Prepare for Health Plan of the Redwoods’ Exit from Medicare+Choice Program

CMS officials this week announced plans to mail a 12-page information letter to the more than 11,000 members of MediPrime, Health Plan of the Redwoods' Medicare HMO, in preparation for a court decision expected Monday that would allow HPR to exit the Medicare+Choice program, the Santa Rosa Press Democrat reports. "We have a letter ready to go to all of HPR's Medicare beneficiaries to assure them they are not losing their Medicare," Gary Bailey, director of health plan benefits at CMS, said, adding, "We don't support HPR breaching their contract, but we will do whatever the court tells us" (Rose, Santa Rosa Press Democrat, 7/12). 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 has asked the bankruptcy court for release from the health plan's Medicare+Choice contract. U.S. Bankruptcy Court Judge Alan Jaroslovsky has scheduled a hearing Monday to consider HPR's request; the health plan also may exit the program without court approval at the end of the year (California Healthline, 7/3). Analysts expect the court to approve HPR's request. CMS officials said that "HPR's use of bankruptcy as a wedge to force its way out of Medicare is precedent-setting." In the past three years, only a few HMOs exited Medicare+Choice before their contracts expired, and in each case, the state assumed control of the managed care plan (Santa Rosa Press Democrat, 7/12).