News in brief - May 8, 2000

Aetna reaches settlement with N.J. health system

Aetna U.S. Healthcare and Atlantic Health System in New Jersey have reached an out-of-court settlement to a lawsuit that Aetna filed in January to prevent the health system from terminating two contracts with the insurer this summer.

Aetna and Florham Park, N.J.-based Atlantic have agreed that the insurer's contracts with Morristown Memorial Hospital and Mountainside Hospital will continue through Dec. 31. Because New Jersey insurance regulations require a 120-day notice for contract terminations, the contracts will actually expire April 30, 2001.

Atlantic had sought to terminate its Morristown and Mountainside contracts with Aetna in July because it was losing $17 million a year on its Aetna contracts for those two hospitals. Aetna, however, claimed that Atlantic wanted to drop the contracts to negotiate better rates. Aetna filed the lawsuit Jan. 21 in the Superior Court of New Jersey in Bergen County to force the two hospitals to stay in Aetna's network until May 31, 2001.

Madison, Wis. -- Blue Cross Blue Shield United of Wisconsin received approval March 28 from Wisconsin Insurance Commissioner Connie L. O'Connell to convert to a for-profit insurer. The Milwaukee-based Wisconsin Blues, which insures about 700,000 people, submitted its conversion plan to state regulators in June 1999. Now that the conversion has been approved, the Wisconsin Blues is expected to merge with its for-profit subsidiary, United Wisconsin Services.

As part of the conversion plan, the Wisconsin Blues will transfer stock for the full value of the company, estimated at $250 million, to a foundation that will distribute the money to the state's two medical schools. Under the original proposal, the two medical schools would have used all the funds for research and education.

However, in response to consumer concerns raised at public hearings, O'Connell directed that 35% of the funds be used for public health programs.