More than 2,500 of the 20,000 Utahns left uninsured in August when Maxicare Utah Inc. shut its doors got some welcome news this week.
They will not be held responsible for any outstanding medical bills the insolvent health plan owes Intermountain Health Care facilities, IHC President Scott S. Parker announced Saturday.IHC's announcement could have taken a different tone, a dismal one.
According to Parker, IHC, which provided hospital services to the majority of Maxicare patients, could legally require patients to pay for medical services not reimbursed by Maxicare. IHC is owned more than $3.5 million.
Instead, he said IHC will assume responsibility for those unpaid bills and will continue to seek compensation for Maxicare's debts from the liquidation of the health plan's assets and from a state health insurance guaranty fund.
"Our feeling is that people insured by Maxicare aren't responsible for the health plan's liquidation and shouldn't be held accountable for its debts," Parker said.
Illustrating his point, Parker related the story of 10-month-old Jordon Joos - a poignant example of the human impact of the closure of Maxicare. Since Jordon was born in December, he's been in the newborn intensive care unit at IHC's McKay-Dee Hospital Center in Ogden with a severe respiratory ailment.
His parents were insured by Maxicare through June 1988, but Maxicare failed to reimburse IHC for the more than $350,000 spent on Jordon's medical care from his birth until the end of June.
"We want to assure the Jooses and all other parents formerly insured by Maxicare that any medical services they received at an IHC facility that weren't reimbursed by Maxicare will be absorbed by Intermountain Health Care," Parker said. "Patients only need pay costs, such as deductibles, they normally would have been required to pay under Maxicare's benefit plan."
Jordon Joos will likely remain at McKay-Dee until the end of the year, when his doctors expect his lung capacity to improve sufficiently. The bill for Jordon's treatment is now nearly $500,000.
Since Maxicare announced on Aug. 16 that it would cease doing business in Utah, IHC and other Utah health care organizations have been working with the state insurance commissioner to ensure that health benefits continue without interruption for Maxicare's 20,000 subscribers.
Insurance Commissioner Harold C. Yancey said virtually all of Maxicare's former subscribers now have health insurance provided by Utah's other solvent health maintenance organizations, commercial insurance plans and employer-based self-funded plans.
Eleven HMOs are licensed in Utah, but only eight are active. Of the eight, six had losses totaling $11.7 million in 1987. IHC Health Plans Inc., IHC Care Inc., Equicor Health Plan of Utah, Physicians Health Plan of Utah, and HealthWise - like Maxicare - have lost money for at least two years.
Combined, the six companies have lost more than $26 million since 1983, according to annual reports filed with the Insurance Commission.
Only FHP and Educators Health Care made money in 1987 - $5.3 million and $61,000 respectively.
But Yancey doesn't want people to panic. He doesn't expect any other HMOs to shut down. In most cases the HMOs have a parent "with reasonable financial resources to protect them." Intermountain Health Care is one such "parent."
A liquidation plan for Maxicare Utah Inc. is now being formulated by the state Insurance Department. At the end of February 1989 it will be known exactly how much money is available to be distributed to creditors, including IHC.