Tennessee insurance regulators have moved to shut down two managed-care organizations serving the state's Medicaid program, known as TennCare.
The Tennessee Department of Commerce and Insurance filed motions this month in Davidson County Chancery Court to liquidate Universal Care of Tennessee and Xantus Health Plan of Tennessee. In each case, state regulators contend that the insurer's finances were so poor there was no chance to rehabilitate the company.
In April, TennCare officials canceled the program's contracts with Universal Care, effective June 1, and with Xantus, effective Aug. 1. Universal Care, which covered 95,000 TennCare beneficiaries, responded to the April cancellation by filing suit in U.S. District Court in Nashville, seeking to force TennCare to uphold the contract and pay $61 million that Universal Care contends is owed to physicians and hospitals but hasn't been paid by the state, according to court records and a company statement. The federal case is still pending.
Universal Care also has asked the state claims commission to rule on its claim, said Paula Wade, a spokeswoman for the commerce and insurance department. Xantus, however, has indicated that it will not fight the liquidation, Wade said. A court hearing on Universal Care's liquidation is set for June 25; no hearing has been scheduled for Xantus.
In their liquidation petition, insurance regulators said Universal Care had a negative net worth of $48 million as of March 31. Universal Care contends that its net worth as of that date was $6.5 million, since it expects to receive the disputed payment from the state. The regulators pointed out in their petition that even Universal Care's figure falls $1.2 million short of the financial reserve required by law. Moreover, the petition said, state law does not allow disputed state payments to count toward meeting the reserve requirement.
Xantus, with 124,000 members, was seized by the state in 1999, when the health plan had a negative net worth of $24.4 million, according to court records. That deficit has grown to $74.6 million, court records show.