PacifiCare hopes to regroup financially in Colorado

The insurer plans several steps to put itself in a better position.

By Julie A. Jacob, AMNews staff. April 23/30, 2001.

PacifiCare of Colorado, hit with a $40 million loss over the past two years, is withdrawing from several rural counties in the state and bolstering its medical management plans in an effort to return to profitability.

The company, which covers more than 400,000 people in Colorado and has about 4,200 primary care physicians and specialists in its network, is a subsidiary of Santa Ana, Calif.-based PacifiCare Health Systems.

PacifiCare of Colorado lost $24 million last year alone, due in large part to its decision to switch from capitation to fee-for-service reimbursement for physicians and hospitals, said Laura Wegscheid, PacifiCare of Colorado's vice president of public

PacifiCare's decision to move from capitation to fee-for-service resulted in a "significant jump in medical costs," noted Jim Hertel, editor of the newsletter Colorado Managed Care.

The strategy for returning to profitability includes pulling its commercial HMO from 15 rural Colorado counties and withdrawing its Medicare HMO from almost all markets. See correction.

The firm is also negotiating doctor and hospital contracts before open enrollment periods for employer health benefits so that the firm can set its premium rates for next year based on rates it negotiates with physicians and doctors, Wegscheid said. [...]