Health Plan of the Redwoods’ Financial Information Raises Some Questions
In financial statements filed in bankruptcy court, Health Plan of the Redwoods said it owes $38.7 million to medical providers but has $52.6 million in assets, figures that are "far more" than initial estimates, the Santa Rosa Press Democrat reports. Faced with an $8 million budget deficit since Jan. 1, HPR filed for federal Chapter 11 bankruptcy protection in May. The gap between HPR's debts and reserves was "significantly less" when the health plan filed for bankruptcy protection -- approximately $23 million in debts and $30 million in reserves, the Press Democrat reports (Rose, Santa Rosa Press Democrat, 7/9). The discrepancy prompted HPR members and physicians to question whether the managed care company met the "classic bankruptcy standard of bills exceeding assets." However, HPR officials said Tuesday that the financial statements did not include $10 million in old claims that HPR expects to receive. The Press Democrat reports that the extra $10 million in claims means that the insurer's assets and liabilities were only $4 million to $6 million apart when it filed for bankruptcy protection. HPR attorney Samuel Maizel said, "You don't have to have a negative balance sheet to file for bankruptcy. You don't want a company to wait until the last minute because then it could not pay its bills" (Rose, Santa Rosa Press Democrat, 7/10). In other HPR news:
- Officials from the Independent Practice Association of Mendocino and Lake Counties said they do not intend to renew their contract with HPR when its current agreement expires Oct. 1. While the medical group will meet with HPR officials to negotiate a new contract, it is opposed to the cuts in payments that HPR is seeking. If no agreement is reached, the current contract requires the 182 doctors affiliated with the medical group to continue treating HPR patients for another year. HPR owes the medical group about $358,000 (Santa Rosa Press Democrat, 7/10).
- With HPR attempting to end its participation in the Medicare+Choice program as part of the bankruptcy proceedings, health care experts are advising seniors enrolled in the insurer's MediPrime program to "sit tight and not jeopardize their coverage." Unless seniors plan to enroll immediately in Kaiser Permanente's Senior Advantage program, they should wait until they receive a termination notice from HPR before examining other options, officials say. Seniors who leave the plan now would lose their right under federal law to shift to a Medigap program without a physical examination. Given that the Department of Managed Health Care and CMS would need to approve HPR's plan to exit Medicare+Choice, it will be several months before seniors would need to switch (Rose, Santa Rosa Press Democrat, 7/6).