Maxicare Won’t Block Members Switching Plans
Maxicare Health Plans’ chairman and chief executive, Peter J. Ratican, said Monday that the financially troubled company may not object to employers immediately giving Maxicare members the option of switching to other health plans.
Ratican said Maxicare would, however, want to make a presentation to employees before the open enrollment. “We would prefer that they have an open enrollment,” he said in an interview. “If we could be involved in the process, we could support it. If they do it without telling us, then we think that is an unfair practice.”
Some employers contacted Monday said they would be interested in discussing with Maxicare an open enrollment under those circumstances.
Ratican’s statement represents a change in policy adopted by the health maintenance organization immediately after it filed for bankruptcy protection on March 16. At that time, Maxicare said it would sue employers that attempted to hold open enrollment periods that were not regularly scheduled.
Open enrollments--the only time employees can switch health care plans without penalty--are held in January at most companies. Maxicare argued that special open enrollments would violate a federal court order barring doctors, hospitals and other health care providers from refusing to provide services to Maxicare because of past due debts.
Arguing that the order also applied to employers who contracted with the company for health-care coverage, Maxicare won a restraining order barring the federal government from allowing its workers--the largest single group of Maxicare members--to leave Maxicare.
Although Xerox Corp. pressed ahead and allowed its employees to switch to an in-house medical plan, other companies have cited the court order as a reason for not holding an open enrollment that would allow employees to drop Maxicare. Maxicare didn’t seek an order against Xerox, Ratican said, because “we can’t sue everybody.”
Maxicare simply wants a chance to make its case that it is “alive and well” and continues to make available “quality” medical care despite the Chapter 11 filing. “We want employers to make the decision based upon the facts, not emotion.” When Maxicare officials have met with employers, “they have decided to stay with us. There are a lot of people that didn’t have the opportunity to sit with us. In some cases, they have chosen to bolt from the system,” Ratican said.
Although Maxicare did not participate in the recent open enrollment held at Hughes Aircraft in March, Maxicare still retained more than 6,000 of its 16,000 members, he said. Hughes was in the middle of a regularly scheduled open enrollment when Maxicare filed for Chapter 11, but the company held the enrollment open for an extra month after the filing.
In recent weeks, Lockheed Corp. has also allowed Maxicare enrollees the opportunity to switch plans. About half of the 1,700 to 1,800 enrollees dropped Maxicare, according to Earl Mink, Lockheed director of employee benefits. Mink said last week that Maxicare had not objected to the changes although it was not a regular open enrollment period.
San Francisco-based Bank of America, which usually has a January enrollment period, said it would consider holding a special open enrollment under the conditions Maxicare outlined Monday.
The Los Angeles Times, which has about 2,000 Maxicare enrollees, also said it would consider an open enrollment. However, “I’m not sure it’s called for,” said Cynthia K. Zieminski, employee benefits manager. The Times surveyed Maxicare members after the bankruptcy filing, she said. Of some 350 people who responded, “we only had 60 negative comments.”
Maxicare Chief Financial Officer Eugene L. Froelich said the company currently has about 625,000 members, down from about 900,000 at the time of the bankruptcy filing. Current membership excludes the 54,000-member Ohio plan, which the company intends to sell, and a few smaller plans that have been sold or dismantled, he said.
Froelich said the company paid all current bills due in April and expects to do so in May.
