News and Commentary

N.J. Orders HMOs To Accept HIP's 144,000 Members


Unable to find an acceptable suitor for HIP Health Plan of New Jersey, state officials on March 31 closed the deeply indebted HMO they seized late last year and are liquidating its assets.

Regulators ordered other HMOs in the state to accept HIP's 144,000 commercial subscribers without regard to existing medical conditions. Last month, a state judge ended a last-minute tussle over control of the HMO when he rejected HIP of New York's takeover proposal.

When HIP was placed into rehabilitation, it owed physicians, hospitals, and other providers $120 million. Its debt had been reduced to $48 million by mid-March. The Medical Society of New Jersey sued HIP, claiming that it diverted millions of dollars that were owed to its members.

Meanwhile, California officials seized MedPartners' management services organization and put it under Chapter 11 bankruptcy protection. According to court documents, MedPartners owes physician groups and hospitals $73 million — a claim the company denies.

The MSO contracts with plans on behalf of practices owned by MedPartners. The state takeover does not apply to those practices.

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