A Maricopa County (Ariz.) Superior Court judge has placed a Tucson, Ariz.-based for-profit HMO into receivership with the state insurance department.
Five-year-old Premier Healthcare of Arizona is expected to be liquidated. "We're not sure anyone's standing in line to pick up the assets," said Don Harris, an insurance department spokesman.
A statewide conglomerate of eight hospital systems and their affiliated medical groups launched the HMO in 1994. MatureWell, a Tucson-based manager of senior healthcare benefits, bought the plan in March.
Some providers claim Premier had not paid the bulk of its claims for months. The HMO owes about $12 million to hospitals, according to the Arizona Hospital and Healthcare Association. The insurance department has not determined how much money physicians are owed and whether the provider founders of Premier share liability.
Some physician groups were close to canceling contracts because of nonpayment. Forest Family Medicine, a five-physician practice in Flagstaff, Ariz., notified Premier enrollees earlier this month that it would stop accepting them Dec. 10. "A large amount of the money Premier owed us was more than 120 days overdue," said Forest Family business manager Merna Lester.
The HMO nearly broke even in 1998, posting a loss of just $24,539 on revenues of $96.8 million, according to the insurance department. That was an improvement from 1997, when Premier officials said the HMO lost about $1.5 million on revenues of $55 million. However, the insurance department said Premier lost $3.8 million during the first half of 1999.
The insurance department began monitoring the HMO after the sale to MatureWell. Premier officials submitted a turnaround plan in October but found the HMO didn't have the funds to implement it, Harris said.
Harris said MatureWell is not included in the receivership. Officials at MatureWell and Premier did not return phone calls seeking comment.
In the past two years Premier enrollment doubled to 50,000 commercial members and 20,000 Medicare members, but money woes overshadowed the HMO's growth.
Premier's $10 million reinsurance policy will help fund post-receivership payments to providers and care for enrollees until Jan. 15.