Maryland's insurance commissioner has ordered United HealthCare of the Mid-Atlantic to pay millions of dollars in the leftover claims of three defunct physician networks.
United HealthCare, the Woodlawn, Md.-based subsidiary of managed-care giant UnitedHealth Group, had risk contracts with all three physician networks.
The networks are:
* Doctors Health, a 120-physician primary-care network based in Towson, Md. Doctors Health, which is co-owned by the University of Maryland Medical System and 414-bed St. Joseph Medical Center in Towson, filed for bankruptcy in November 1998.
* Maryland Personal Physicians, a physician practice management firm based in White Marsh. The PPM, which is jointly owned by St. Joseph, 240-bed Mercy Medical Center in Baltimore and two-hospital Upper Chesapeake Health System in Fallston, Md., filed for bankruptcy in September 1999.
* Dimensions Health Network, a primary-care network based in Cheverly, Md. The network, which was owned by Dimensions Health Corp., ceased operations in November 1999.
Under the commissioner's Dec. 27, 1999, order, United must pay $2.8 million to cover the claims of Doctors Health by Jan. 31. The state also wants United to pay unspecified millions to cover the claims of Maryland Personal Physicians and Dimensions Health Network. Those payments are due by March 31 and April 30, respectively.
If United does not pay the claims, the state can suspend or revoke its Maryland HMO license and fine United up to $1,000 for each day the claims remain unpaid.
United said it is carefully reviewing the state's order and declined further comment.
According to the state, United is liable for the unpaid claims of the physician networks because the state-licensed HMO is ultimately responsible for monitoring its risk contractors' ability to pay claims. The state has authority over the HMO, but has no direct oversight of any of the HMO's contractors.
The dispute about which organization is ultimately responsible for paying the claims illustrates the dangers of "downstream risk arrangements." In such schemes, the HMO "downstreams" responsibility for patient care and claims payments to the organizations with which it is contracting. But under Maryland law, the HMO, which is licensed by the state, must monitor its contractors' ability to pay claims.
A number of Baltimore-area hospitals invested in the two bankrupt ventures. The University of Maryland Medical System and St. Joseph Medical Center together lost a total of $8.5 million they had invested in Doctors Health (Dec. 14, 1998, p. 38).
St. Joseph also lost $10 million in Maryland Personal Physicians, a venture started by Mercy Medical Center, which itself lost $14 million. Upper Chesapeake Health System also had an ownership stake in the venture.
It is unclear how much Dimensions Health Corp., which owns Laurel (Md.) Regional Hospital and 370-bed Prince George's Hospital Center in Cheverly, lost before shutting down the network.