Decision on Health Plan of the Redwoods’ Request To Exit Medicare+Choice Expected Wednesday
U.S. Bankruptcy Court Judge Alan Jaroslovsky yesterday said that he would issue a decision as early as Wednesday on whether to allow Health Plan of the Redwoods to exit the Medicare+Choice program, the Santa Rosa Press Democrat reports (Rose, Santa Rosa Press Democrat, 7/16). 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 early release from the health plan's Medicare+Choice contract. The health plan can exit the program without court approval at the end of the year (California Healthline, 7/12). Jaroslovsky had planned to rule on Monday but decided to take additional time to "study the issues." HPR officials have attributed $4.5 million of the health plan's losses this year to "spiraling costs and inadequate reimbursements" in the Medicare+Choice program. In testimony yesterday, HPR CEO Rod Stroud said that the health plan could avoid the $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. He added that "many business are expressing reluctance" to accept HPR premium increases "because they feel they are subsidizing the money-losing" MediPrime program.
Sonoma Valley Hospital and Valley of the Moon Medical Group have opposed HPR's request to exit Medicare+Choice. The medical group's 50 doctors treat about 1,250 MediPrime members, and the doctors could lose as much as to $1.1 million if the HMO is dissolved, according to attorney John MacConaghy. He added that many of the program's beneficiaries could not afford Medigap coverage. In addition, CMS would prefer that HPR continue to provide coverage until the end of the year. However, the agency would accept HPR's exit if it receives 60 days advance notice (Santa Rosa Press Democrat, 7/16).
In related news, during a hearing for its creditors on Friday, HPR officials said they are "confident" that the health plan will recover financially, although providers, employers and members are dropping the insurer. Stroud said that the health plan will have "fewer choices of doctors" and increased premiums for employers and plan members after the restructuring. Some creditors are "skeptical" that HPR can maintain its provider network as a result of the reimbursement reductions it is seeking. To date, only 25 of HPR's 900 physicians have signed contracts accepting reduced payments. Although HPR officials declined to say whether they are negotiating a buyout with another insurer, the health plan is "exploring all options," the Press Democrat reports (Rose, Santa Rosa Press Democrat, 7/13).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.