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HEALTHEAST HOSPITALS TO LEAVE MEDICA CHOICE NETWORK OF PARTICIPATING PROVIDERS

 HEALTHEAST HOSPITALS TO LEAVE MEDICA CHOICE
 NETWORK OF PARTICIPATING PROVIDERS
 MINNEAPOLIS, July 15 /PRNewswire/ -- HealthEast and Medica Choice announced today that they have been unable to reach agreement on a new contract for reimbursement of health care services to plan members and that the hospitals in the St. Paul, Minn.-based system will cease to be Medica Choice providers effective Sept. 1, 1992.
 Spokesmen for the two organizations said that the change will affect relatively small amounts of their businesses. About 1800 of the approximately 78,000 Medica Choice members in the Metro East area were admitted to HealthEast hospitals in 1991. Those admissions were about 6 percent of HealthEast's total inpatient admissions and about four percent of the hospital system's net revenues last year.
 The lack of an agreement means Medica Choice enrollees in the East Metro Area will not have full HMO benefits at the five HealthEast hospitals located in St. Paul; Maplewood, Minn.; and South St. Paul, Minn. Other relationships between Medica Choice and HealthEast for non- hospital services, including home health, transportation services and others continue.
 Medica officials are working with other nearby hospitals including United and St. Paul-Ramsey Medical Center, St. Paul and Riverside Hospital, Minneapolis, for admission of Medica Choice members. Medica has notified the Minnesota Department of Health of the change and both organizations are communicating with affected plan members, employer groups, physicians and hospitals.
 The two organizations cited irreconcilable differences on economic and other terms for the unsuccessful negotiations.
 According to Timothy Hanson, HealthEast president and chief executive officer, the hospital system sought reimbursement rates "necessary to cover costs of delivering high quality service to Medica Choice patients and to avoid shifting costs to employers and other payers."
 K. James Ehlen, Medica's chairman and chief executive officer, said, "HealthEast demands were well beyond increases the plan has seen from other hospitals in the Twin Cities and would add costs above expected cost trends."
 Lengthy discussions between the two organizations were aimed at establishing a multi-year agreement effective Sept. 1, 1991.
 Hanson and Ehlen recalled that their organizations have had a relationship dating back to the PHP and pre-HealthEast days. They agreed that they "regret the inability to reach a mutually beneficial arrangement and would continue to look for opportunities to establish new relationships."
 -0- 7/15/92
 /CONTACT: Peter Fish of Medica, 612-936-6849; or Roger Green of HealthEast, 612-232-2310/ CO: Medica Choice; HealthEast ST: Minnesota IN: MTC INS SU:


KH -- MN009 -- 9572 07/15/92 13:00 EDT
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Publication:PR Newswire
Date:Jul 15, 1992
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