News in brief - Jan. 22, 2001

More HMOs likely to exit market - Alabama Blues left out of mental health law - For-profit firm takes over mental health care services for Harvard Pilgrim in Massachusetts

More HMOs likely to exit market

As many as 75 HMOs are likely to go out of business this year, based on a 1999 year-end financial database, according to an InterStudy Publications survey.

In 1999, 83 HMOs closed, bringing the number of U.S. HMOs down to 568 by January 2000. That was a drop from 636 the previous year.

"Our data tell us that troubled HMOs are most likely to be newer entrants into smaller markets. They are not as likely to participate in Medicare or Medicaid programs and are not enjoying the overall industry's profit improvement," said Mark Driggs, a financial analyst at InterStudy.

Alabama Blues left out of mental health law

Blue Cross and Blue Shield of Alabama -- which provides about 80% of the state's health insurance -- claims it is exempt from the new Mental Health Parity Act.

Blues spokesman Jim Brown said the law excludes companies with 50 or fewer workers and although Blue Cross and Blue Shield handles health insurance for 25,000 employers, at least 20,000 of those have fewer than 25 employees.

The act, which kicked in Jan. 1, requires insurance companies to sell mental health coverage on a par with other medical coverage.

For-profit firm takes over mental health care services for Harvard Pilgrim in Massachusetts

A company that hopes to cut costs and intensely scrutinize patients' visits to therapists and hospitals has taken over mental health care services for financially troubled Harvard Pilgrim Health Care, sweeping about 900,000 members into the world of for-profit medicine.

The takeover by ValueOptions, a national firm that already manages mental health services for the state's 500,000 Medicaid recipients, makes nearly one-quarter of Massachusetts residents dependent on a company that some say profits in part by controlling the cost of their treatment for depression and other mental illnesses.

In response, some psychiatrists and psychologists are quitting Harvard Pilgrim's network after finding out they would be paid less under ValueOptions.

However, some in the state say ValueOptions has a record for promptly paying claims and running an efficient and responsive company.