KPC: Zingale Calls for Emergency Plan if Medical Group Folds
During a "tense meeting" last week, Daniel Zingale, head of the new Department of Managed Care, demanded that insurers contracting with KPC Medical Management inform the group's 400,000 patients of their rights if the "company goes under," the Los Angeles Times reports. KPC, the state's largest for-profit medical group, has been "teetering near bankruptcy for months" and two weeks ago "missed payroll" for many doctors, nurses and administrative employees. Zingale said that a "key issue" is whether Southern California has enough doctors to absorb patients should the company shut down. Compounding the potential problem, medical groups that took over care for the 100,000 patients Cigna Corp. and Blue Shield of California transferred out of KPC last month have complained that it is "financially difficult to care for the new patients." While Zingale does not have the authority to shut down KPC, he said insurers that contract with the medical group would be "responsible for assessing whether the group is functioning properly and is financially sound." During the meeting, KPC officials said that two health plans had given them a temporary loan to pay employees and that a larger loan and a bailout plan are "still being worked out" (Bernstein, 8/29).
Another Group Folds
In other medical group news, the San Mateo Individual Practice Association has closed, becoming the 21st large medical group to do so in the last year, the San Mateo County Times reports. IPA officials blamed HMOs' "declining reimbursement rates" for the closure. IPA CEO Lisa Kraymer said that payments had dropped 25% between 1994 and 1999, specifically targeting Blue Shield of California and Health Net for the group's demise. She said the insurers recently announced they would not pay for senior care through IPA. Jack Lewin, California Medical Association CEO, concurred, noting that California medical groups have gone out of business because of low reimbursement rates and "because HMOs force doctors to cover rising pharmaceutical costs." He said, "California faces a crisis of which San Mateo IPA is an example. We're heading for a new era and there's going to have to be another kind of HMO. But we're not there yet." But Bobby Pena, spokesperson for the California Association of Health Plans, said that medical groups are "all being paid competitively," adding that California has the "lowest health care premiums of any comparable state." IPA doctors now will have to negotiate their own contracts with HMOs, while some of IPA's 65,000 patients might have to switch doctors (Wallace, 8/30).