A troubled Medicare Advantage HMO now under state receivership has struggled for years to have enough capital available on hand to pay its bills.
A Tallahassee judge on Monday approved the Department of Financial Services' request to take over and liquidate Physicians United Plan Inc., which had offered Medicare Advantage plans since 2005.
Leon County Circuit Judge Charles Francis named the state as receiver, meaning it will immediately take control of all property and assets of the Orlando-based company. Liquidation of all funds will take place on July 1.
Recent financial reports show that Physicians United Plan (PUP) was nearly $13 million in debt and couldn't pay many health-care providers. The judge said rehabilitation and liquidation is in the best interest of the company creditors and the seniors with PUP policies.
The process for liquidating Physicians United has been under way since at least April, when company officials were told to raise additional capital to avoid insolvency, court records show.
But financial problems were nothing new for the company, which is among the smallest of the Florida’s 37 Medicare Advantage HMOS, said Health plan analyst Allan Baumgarten. For several years, the company reported it had inadequate capital in filings with the state’s Office of Insurance Regulation.
OIR did audits and exams of the organization in 2007 and 2009, state records show. The agency raised questions then about the financial strength of the organization. In 2009, it showed the company was $495,000 short of the capital needed. In 2007, that shortfall for safely operating was nearly $317,000/
“If you look through their history, it’s not clear that their finances were too secure to begin with,” Baumgarten said.
Physicians United officials did not respond to requests for an interview. The company offers four Medicare Advantage HMO plans in 17 Florida counties. More than 21,000 of the 39,000 policy holders in 2013 lived in Central Florida or around Tampa Bay.
On the company website, press releases tout its fast growth over the past four years. This quick-growth strategy is a common theme in Florida, where Medicare Advantage HMOs are a highly profitable business, Baumgarten said.
And the state is no stranger to taking over these entrepreneurial efforts. In the 2000s, the state took over at least a dozen insolvent HMOS in the state, Baumgarten said.
“If you do some good marketing, you could grow fast,” he said.
Seniors won't lose coverage and can enroll in new plans approved in their region, said Baumgarten, publisher of Health Market Review, which does in-depth analysis of HMOs in Florida and several other states. They also can revert their policy back to original Medicare.
“The state will ensure that the (seniors) have the ability to enroll in another Medicare Advantage HMO of their choice in that service area, which I think in this case is mostly around Orlando,” Baumgarten said.
But that transition may include some unwelcome change for policy holders.
"It may require a change in doctor and that can be disruptive, particularly to a senior who may have an established relationship with a particular primary care doctor or specialist," Baumgarten said. “Because it could be the doctor they are seeing now may not be in the network of the new health plans they are given to choose from.”
The state's Department of Financial Services is in charge of the financial takeover. But the actual transition for seniors will be handled by the federal Centers for Medicare and Medicaid Services.
CMS will contact all policy holders by mail. They also can call 1 800 MEDICARE, a state DFS spokeswoman Ashley Carr said. She also recommended that consumers visit the DFS website for more information about how a rehabilitation liquidation of an insurance HMO will affect them.
--Health News Florida is part of WUSF Public Media. Contact Reporter Mary Shedden at (813) 974-8636, on Twitter @MaryShedden, or email at shedden@wusf.org. For more health news, visit HealthNewsFlorida.org.
