October 1999 Bulletin

Genesis files for Chapter 11 for risk contracts

A backlog of claims and insurance company reimbursement difficulties led Genesis Physicians Practice Association to file for Chapter 11 reorganization protection for its capitated contracts under the U.S. Bankruptcy Court of Dallas in July.

The independent physicians association's (IPA) 960 physicians were enrolled in seven HMO risk contracts with 30,000 covered lives. The contracts involved were Cigna Health Plan of Texas, PacifiCare of Texas Commercial HMO, Secure Horizons (Medicare HMO), PCA Health Plans of Texas HMO, the Prudential Healthcare Commercial HMO, POS Associates and NYLCare Health Plans of the Southwest.

The bankruptcy action did not affect Genesis's 70 preferred provider organizations and other nonrisk contracts that comprise nearly 90 percent of their business.

According to Ralph Turner, MD, Genesis's chairman, collection problems with their third party administrator (TPA) dated back to 1998. "We knew last fall we were having trouble with our TPA and we moved to another TPA," he explains. "But when our new TPA took over, the old TPA had brought over boxes of unprocessed claims and this overwhelmed the new TPA."

The delinquencies, says Dr. Turner, had nothing to do with physician errors in filing claims or delays. "Our problem was that we were unable to control every aspect of health care financing due to this third party administrator that did not perform to our satisfaction," he stresses.

The risk HMOs accounted for 3 to 15 percent of the IPAs business. "Continuity of patient care has not been affected," explains Dr. Turner. "But all of us are waiting for our money. The doctors are suffering. Their revenue is tied up in bankruptcy court and will be paid cents on the dollar-depending on our clearing up the claim's processing."


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