Questions and answers about the HMO crisis in Massachusetts (computer problems) : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Questions and answers about the HMO crisis in Massachusetts

By Associated Press, 1/9/2000 21:19

Q: How does Harvard Pilgrim's bankruptcy in Rhode Island affect its receivership in Massachusetts?

A: Harvard's chief executive, Charles D. Baker Jr., has said the company's Rhode Island and Massachusetts operations are completely separate. He testified recently that the Rhode Island operation accounted for 10 percent of the company's business, but was responsible for 40 percent of its losses because Rhode Island premiums were much lower than in Massachusetts. Rhode Island officials disagree that the problems are separate. Dr. Robert Marshall, Rhode Island's assistant director of the Department of Health, said Thursday the state is having difficulty separating Harvard Pilgrim's Rhode Island creditors from its Massachusetts creditors and anticipates Massachusetts will have the same problem. Some Rhode Island officials want Massachusetts and Rhode Island to combine forces and conduct a joint audit of the company.

Q: How did Harvard Pilgrim's situation get to this point?

A. When Baker took over in June, he learned the company was using incompatible computer systems. Because its data operations were in disarray, Harvard Pilgrim's payments were often delayed, and it was not able to accurately assess how much it owed and how many premium dollars it would be taking in every month. Baker last week called it a lot of little mistakes that added up to a big mistake.

Technology problems are not unique to Harvard Pilgrim. Bay State Health Care faced a similar problem before it was bought by Blue Cross and Blue Shield of Massachusetts in 1992, and Connecticut-based Oxford Health Systems, once a Wall Street darling, saw its finances plummet in 1998 after its home-grown computer system caused the failure of its claims-processing system.

Q: Would the HEFA deal have solved Harvard's problems?

A: Chris Goetcheus, spokesman for Ruthardt, said it would have. The deal would have allowed the Massachusetts Health & Educational Facilities Authority, an independent state agency that has issued about $3 billion in bonds over the past two years to hospitals and educational facilities, to finance a $150 million bond issue for Harvard Pilgrim. Using the proceeds from the bonds, HEFA would have purchased Harvard Pilgrim buildings for $150 million and leased them back. Since Harvard Pilgrim paid only $60 million for the mortgage-free buildings, it would have realized $90 million in cash. But the deal fell through when Harvard suddenly found a $50-plus million accounting error.

Q: What happened to Harvard Pilgrim's Rhode Island 127,000 members when the company ceased operations on Dec. 31, 1999?

A: The overwhelming majority of subscribers have found a new insurer, but most will pay higher monthly premiums. Some are complaining of difficulties finding new doctors; some, such as pregnant women, are unhappy finding new doctors; some say they cannot get an appointment for several months.

Q: What about doctors who worked for Harvard Pilgrim in Rhode Island?

A: More than 3,000 doctors, nurse practitioners, midwives and others who worked for Harvard Pilgrim are without jobs. Some doctors decided to leave the profession and some have filed for unemployment. In addition to hundreds of hours in back vacation pay, Harvard Pilgrim providers are also waiting for 10 percent of their salary that was set aside in the beginning of each year to be paid back after an end of year review.

Q. Could that happen here?

A. It is possible that Harvard Pilgrim could be declared insolvent and the state would move the HMO's members into other health plans.

Q: How are the commonwealth's hospitals affected by Harvard Pilgrim's problems?

A. The hospitals say they are losing money, thanks to rising costs and lower payments from both HMOs and the state and federal governments. Insolvency by Harvard Pilgrim, which hospitals say owes them $312 million, could force some hospitals to close. Many of the state's hospitals are already operating at close to full capacity.

-- Homer Beanfang (, January 10, 2000


"But the deal fell through when Harvard suddenly found a $50-plus million accounting error."

I can just hear it now:

Doctor: "where's my GODDAM PAYCHECK???"

Harvard Pilgrom Human Resources stooge : "I understand your concern. Don't worry, we'll find you find an appropriate position."

356 days left.

-- Total Doomer (, January 10, 2000.

"Take a number ....."

-- (, January 10, 2000.

Year end is where some HMO's give the fat kick-back to docs who don't order big ticket tests....ah, they are calling it "end of year review" now. Of course we all know the just what the insurance co. is qualified to review, huh?

-- Hokie (, January 10, 2000.

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