Managed Care Report

• Foundation Health Systems (FHS; Los Angeles) said last week it has signed a letter of intent to sell its Colorado health plan subsidiary, QualMed Plans for Health of Colorado, to WellPoint Health Networks (Thousand Oaks, CA). Once FHS and WellPoint finalize and execute the definitive agreement for sale, the transaction will be subject to various conditions, including the receipt of all necessary regulatory approvals and other customary closing conditions. As of Dec. 31, FHS’ Colorado operations had a total membership of 100,000. FHS also said it would phase out operations performed by its service center in Pueblo, CO. This transaction is expected to be completed by the end of 1999. The center provides support operations to various western FHS health plans. FHS reported FY98 revenues of $8.9 billion, compared to FY97 revenues of $7.2 billion. The company recorded an FY98 net loss of $165.2 million, $1.35 per share, compared to an FY97 net loss of $187.1 million, $1.52 per share.

• Sibley Memorial Hospital in Falls Church, VA, has reached an agreement with Aetna U.S. Healthcare (Blue Bell, PA) on a contract that will give members of all Aetna health plans access to all covered services provided at Sibley, said Todd Martin, Aetna U.S. Healthcare’s general manager for Washington, DC. The all-products agreement covers members of Aetna U.S. Healthcare’s HMO, point-of-service, and preferred provider organization plans. Aetna U.S. Healthcare has contracts with 33 hospitals in the Washington, DC, area. In addition, the company’s managed care network includes 1,616 primary care physicians and 4,818 specialists. In other news, The National Committee for Quality Assurance (NCQA; Washington) has granted three-year, full accreditation to Aetna U.S. Healthcare’s Florida HMO. The accreditation covers Aetna U.S. Healthcare’s HMO operations in the Tampa Bay, Orlando, Miami, and Jacksonville metropolitan areas.

• Blue Cross of California (BCCA; Woodland Hills, CA), the California subsidiary of WellPoint Health Networks (Thousand Oaks, CA), has expanded its inquiry-response system to provide greater and more immediate responses to a variety of provider inquiries. The enhancements made to the BCBA Fax Back system, a component of the company’s interactive voice response system, give providers immediate access to eligibility and benefits information, which they can receive in written format through their internal fax machines.

• An Overland Park, KS, physician has sued Humana (Louisville, KY) and its Kansas City-area health plans, claiming they and two other defendants tried to force him out of business in a scheme that scrimped on patient care, reported the Kansas City Star. The other defendants are the Women’s Healthcare Network, an association of OB/GYNs in Lenexa, KS, and OB/GYN Management in Ohio. The physician claims agreements with the defendants led him to question the quality of patient care and reimbursement for that care and ultimately led to his being removed from an approved physician list, the Star reported.

• Unity Health System, a strategic service unit of the Sisters of Mercy Health System (St. Louis), has selected Physmark’s (Dallas) Medicomp software to manage the risk contracts of its various provider networks. Designed specifically from the point of view of providers, Medicomp monitors, administers, and manages risk contracts. This includes maintaining eligibility and benefits; re-pricing, adjudicating, and paying claims; pre-authorization monitoring and case management; and sophisticated financial modeling.

• The Pennsylvania Medical Society and the Pennsylvania Society of Internal Medicine argued in court last week that the merger that created Highmark Blue Cross and Blue Shield seriously undermined competition in the region’s health insurance market. The Pittsburgh Post-Gazette reported that both organizations also argued that Highmark, a nonprofit corporation, is gradually shedding its social mission by shifting its assets and revenues to for-profit subsidiaries. Highmark spokesman Brian Herrmann told the Post-Gazette that the claims, particularly a detailed list of allegations that the internal medicine group submitted to the state Insurance Department, "are baseless and inaccurate." The organizations made their remarks before an administrative hearing officer at the Insurance Department. Highmark was created by the merger of Pennsylvania Blue Shield and Blue Cross of Western Pennsylvania. In other news, Highmark reported a net income for FY98 ended Dec. 31 of $62 million, with revenues reaching $7.5 billion. The company cited improved underwriting results in its health insurance business as the principal reason net income increased substantially over an FY97 net loss from continuing operations of $79 million. President/CEO John Brouse said, "Our underwriting results have improved, but we must continue to focus our attention on this area of our business.