Health Plan of the Redwoods Files for Federal Bankruptcy Protection
Faced with an $8 million budget deficit since Jan. 1, Health Plan of the Redwoods, which serves 78,000 members in Sonoma, Mendocino, Lake and Marin counties, filed for federal Chapter 11 bankruptcy protection on Friday, the Santa Rosa Press Democrat reports. The managed care company said it will continue providing coverage for all its subscribers as it reorganizes its finances. Chapter 11, which must be approved by a U.S. Bankruptcy Judge, would require hospitals and doctors to "slow their billings and reimbursement requests for services" during HPR's reorganization (Rose, Santa Rosa Press Democrat, 5/31). HPR is the first HMO in the country to file for federal bankruptcy protection since Boston-based Harvard Pilgrim Health Care did so in 1999, according to the American Association of Health Plans. HPR CEO John Baxter said his company will increase premiums "in the 20% to 30% range," as opposed to a planned 17% increase before the filing. Baxter added that the company will "reduce and restructure" Medicare supplemental plans and "most likely" make mandatory a multitiered copayment system for prescription drugs (Lauer, Santa Rosa Press Democrat, 6/2).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.