State Seizes Maxicare Health Plan, Company Files for Bankruptcy 05/29/2001
The California Department of Managed Health Care on Friday "seized control" of Maxicare Health Plans Inc. in a "drastic attempt to prevent the Los Angeles-based HMO from slipping into insolvency," the Los Angeles Times reports (Ballon/Gellene, Los Angeles Times, 5/26). However, the company then "unexpected[ly]" filed for protection in federal bankruptcy court, which could "thwart state efforts to ensure the HMO's payments to hospitals and doctors and force its 272,000 members to scramble for new health insurance," the Sacramento Bee reports. According to DMHC Director Daniel Zingale, the agency moved to seize Maxicare to avert a "potential health care crisis" after a recent state audit found that the managed care company was "$8 million short of minimum solvency requirements in March and April and lacked up to $12 million necessary to meet incoming medical claims for care already provided to its members" (Rapaport, Sacramento Bee, 5/26). Earlier this month, Indiana regulators seized and shut down Maxicare's operations in that state, also citing financial concerns (Fong, San Diego Union-Tribune, 5/26). Maxicare was "being run in a manner that is unsafe and injurious to enrollees," according to DMHC officials. Zingale said that Maxicare failed to provide prompt access to mammograms and delayed addressing patient grievances. Zingale added, "Our goal is for the care to continue uninterrupted for patients. We lost confidence in Maxicare's ability to do that."




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