Thursday, June 15, 2000

PacifiCare exiting Ohio, Ky.

60,000 need new health plans

By Tim Bonfield
The Cincinnati Enquirer

        PacifiCare Health Systems, one of the Tristate's five largest managed care health plans, announced Wednesday that it plans to shut down its business in Ohio and Kentucky by Dec. 31.

        The departure will affect about 54,000 people covered by PacifiCare's commercial HMO and PPO products plus about 6,300 members of Secure Horizons, the company's Medicare HMO.

        PacifiCare, a publicly traded health company that covers 3.7 million people nationwide, decided to drop its only market east of the Mississippi River as part of a corporate refocusing.

        “It's really about our new strategic direction to focus our energies on the Western United States,” said spokeswoman Laura Wegscheid. “We were actually having a pretty good year in Ohio (commercial enrollment was up 14 percent in 2000 compared to the year before).”

        Short-term, PacifiCare's exit is not expected to cause much disruption to health coverage for Tristate resi dents. That's because Anthem Blue Cross and Blue Shield announced Wednesday it has agreed to pick up PacifiCare's Greater Cincin nati commercial customers.

        “Anthem products and networks match up closely (with PacifiCare). Most companies will be able to switch with virtually no effect on choice of doctors and hospitals,” said Paul Beckman, president and chief executive of Paragon Health System, the company that manages Anthem's local health plans.

        Whether switching to Anthem will require companies to pay higher or lower rates depends on negotiations that in most cases have not begun, Mr. Beckman said. Anthem would not disclose how much, if anything, it paid to PacifiCare to acquire rights to the commercial business.

        The status of Secure Horizon members is a different issue.

        Last year, PacifiCare announced it would not accept new Secure Horizons members, effective Jan. 1, 2000. Now, the 6,300 members still in Secure Horizons have until Dec. 31 to find a new plan on their own.

        Letters explaining the options are expected to go out to seniors within days, Ms. Wegscheid said. Basically, seniors can switch to another Medicare HMO where benefits and doctor choices may vary; spend several hundred dol lars to buy a Medicare supplemental plan, assuming they can get accepted; or return to regular Medicare with its various co-payments and deductibles.

        Anthem opted not to pick up Secure Horizons members as a group. Mr. Beckman said there was no need because any Medicare HMO member can switch to another HMO with a month's notice.

        Overall, employers have been concerned about continuing consolidation in Greater Cincinnati's managed care market, with Humana buying ChoiceCare in 1997 and Aetna U.S. Healthcare more recently acquiring Prudential.

        With PacifiCare's exit, the field of large players will drop from five to four: Anthem, ChoiceCare/Humana, United Healthcare and Aetna U.S. Healthcare. At least two dozen other health insurers continue doing business in the area.

        “As far as competition goes, they weren't that much of a player to begin with,” said Sharron DiMario, executive director for the Employer Health Care Alliance. “Prices are going to go up anyway, but this won't have any impact.”

        As for jobs, PacifiCare employs 49 people in its Cincinnati office. Many of them are likely to be offered jobs with Anthem, officials with both companies said.


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