DMHC Officials Expected To Announce Future of Lifeguard Today

Officials from the Department of Managed Health Care today are expected to announce the future of San Jose-based HMO Lifeguard, which the state took over last week, the San Jose Mercury News reports. There are "strong indications" that the HMO will cease operations for good on Dec. 31, the Mercury News reports. Lifeguard has 168,000 members and 10,000 member doctors (Feder Ostrov, San Jose Mercury News, 9/24). The DMHC on Friday assigned a conservator to assume control of San Jose-based Lifeguard because the not-for-profit HMO failed to meet state solvency requirements. The HMO's financial reserves fell below the state's requirement of $17 million to $18 million, according to DMHC spokesperson Steven Fisher. Lifeguard also has liabilities of more than twice its assets, causing concerns about its ability to pay creditors (California Healthline, 9/16). Lifeguard is not expected to declare bankruptcy, which means it will likely pay its debts to providers, William Parrish, CEO of the Santa Clara County Medical Association, said.

If Lifeguard shuts down, California will have only two "major" not-for-profit HMOs, Kaiser Permanente and Blue Shield, the Mercury News reports. In addition, Lifeguard's members and physicians may have to "scramble for alternatives." In the meantime, Lifeguard has assured its beneficiaries that they will be covered through the end of December. Physicians who have contracted with Lifeguard are legally obligated to provide care to those patients, the Mercury News reports (San Jose Mercury News, 9/24).