Springfield, MO

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Humana's departure leaves 20,000 HMO lives up in air

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by Paul Flemming

SBJ Staff

Humana Inc. announced Sept. 15 its withdrawal from the Springfield market, among three other markets.

Gordon Kinne, CEO of Humana Med-Pay Inc. in Springfield, said the company's HMO contracts will be honored through existing anniversary dates and perhaps beyond. He said the company is still determining its notice requirements called for by state regulators.

The company covers about 32,000 people in southwest Missouri, about 20,000 in health maintenance organization plans and 12,000 in preferred provider plans, Kinne said.

Med-Pay also covers about 33,000 lives as a third-party administrator for company self-insured plans, Kinne said.

The Humana announcement "doesn't have any direct impact on Med-Pay. It's business as usual," Kinne said.

Humana's business in Springfield was through contracts with St. John's Health Systems. Kinne said Humana is exiting the HMO market but will reconfigure PPO products and try to remain active in that arena.

"Pricing compared to competitors (in the PPO market) is what determines if they'll be active," he said.

Humana officials cited the scuttling of a proposed merger with United HealthCare as the cause of leaving not only Springfield, but also Jefferson City, and Sarasota and Treasure Coast, Fla.

"If the merger occurred, there was the chance to be a little more cost-effective," Kinne said.

"We had anticipated improved performance in certain of our markets from planned initiatives, including the synergies that would have resulted from the proposed merger," said Gregory H. Wolf, president and CEO of Humana, in a release.

Humana also announced a $132 million pre-tax charge against third-quarter earnings. The company said $63 million of the charge is costs for exiting markets and discontinuing products, severance and lease-termination costs.

Gary Jacobs, president of Cox-Freeman Health Plans, said the Humana withdrawal will probably take about a year to play out.

"We'll all want an opportunity to bid on business" leaving Humana, Jacobs said of companies looking for alternative insurance coverage.

"I think it's probably a shock to those who had Humana plans," Jacobs said of the unexpected media announcement. "You'd probably hope to hear from your carrier rather" than through newspaper reports.

Kinne said he sees no obvious successor among remaining HMO insurers in the wake of Humana's departure. "Every-body's HMOs are pretty pricey," Kinne said. "I don't know if anybody will come out the big winner."

Though Humana's plans were contracted with St. John's providers, he said, Premier Health Plans' contracts with St. John's will be a secondary consideration for businesses shopping their health insurance business. "What they have to pay is going to be the first driver" rather than staying with the same provider network, Kinne said.[[In-content Ad]]


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