MOKENA – Less than four years ago, PersonalCare Insurance and Provena Health were part of the same corporate family.
But whether they were a happy family was never really an issue in the public eye.
What has become an issue, at least recently, is that the break-up of those two companies isn't going so well.
Provena Health sold PersonalCare to Maryland-based Coventry Health Care in 2003, and this spring Provena and PersonalCare launched a glaringly public dispute that could affect every PersonalCare member who wants to go to a Provena hospital.
In short, Provena wants out of its contract with PersonalCare, and if it prevails in ending the contract, its hospitals may no longer be in PersonalCare's provider network.
According to a lawsuit filed earlier this month in Kane County by Provena Hospitals – Provena Health's six-hospital system that includes Provena Covenant Medical Center in Urbana and Provena United Samaritans Medical Center in Danville – the dispute started when Provena discovered what kind of health plan PersonalCare is administering for the employees of Parkland College in Champaign.
The lawsuit states PersonalCare is contractually bound to provide incentives that steer its members to Provena facilities when they need hospital care. But Parkland's health plan is an indemnity plan that provides no such incentives.
In a traditional indemnity plan – the kind most folks had before the era of managed care – the insurance company picks up a flat percentage of the cost of a medical service and the patient picks up the rest.
In a managed-care plan, the insurer negotiates discounted rates with providers like Provena and then establishes incentives to direct its members to those providers – for example, by establishing a provider network and giving members the highest level of coverage for going to in-network doctors, hospitals and pharmacies.
Provena's hospital system claims PersonalCare and its parent company are getting Provena's discounted rates and not following through on the incentive end of the bargain in cases.
Parkland benefits manager Betty Zeedyk said Parkland has had a self-funded insurance plan for its 490 full-time employees for seven years, but has been contracting with PersonalCare to administer it since last July.
The lawsuit doesn't involve Parkland, she said. Parkland just happens to be mentioned as one of the plans Provena objects to under the terms of its provider contract with PersonalCare.
"We have been assured by PersonalCare that we are not a party," Zeedyk added. "This is a dispute between PersonalCare and Provena."
The lawsuit states that a May 2 letter from Todd Petersen, chief executive of PersonalCare, acknowledged that Coventry did enter into such an indemnity arrangement for Parkland College's self-funded plan – but that it was the only such arrangement, and it was entered into "inadvertently."
In that letter, Coventry offered to pay Provena $254,049 to make up the difference between what Provena would have been paid under its standard rates and the discounted rates paid out under the Parkland plan between July 1, 2005, and March 31, 2006. Coventry also offered to make monthly payments after that lump sum to continue compensating Provena for the difference under the Parkland plan, including a $9,561 payment for April.
Provena didn't accept the deal and began informing brokers and members that it was terminating its contract with PersonalCare, according to a follow-up letter from PersonalCare's attorneys to Provena Health Chief Executive William Foley.
The lawsuit also claims Provena discovered Coventry had misled the hospital system about the Parkland plan being the only indemnity arrangement it had. Provena claims Coventry was applying Provena's discounts to other non-managed-care products and had set up "numerous other indemnity health plan arrangements."
Provena pushed the issue into the public eye late last week by announcing it was terminating its contract with PersonalCare as of June 2, but PersonalCare obtained a temporary restraining order in Champaign County to keep the contract intact while the two companies arbitrate.
"Provena Health stands by our claims that PersonalCare very seriously violated its contract with us," Provena spokeswoman Lisa Lagger said after the restraining order was issued.
However, she added, the contract will remain in effect "until such time as this matter is resolved either through arbitration or through our still pending lawsuit against PersonalCare."
Coventry officials last week contended Provena is trying to pull out of a contract that is no longer to its financial advantage, but declined to comment further on the lawsuit.
Provena is seeking a release from its contract with the insurer and a declaration entitling it to announce that it is no longer in Coventry's provider network. The hospital system also wants an order directing Coventry to pay Provena the difference between the full amount of claims and the discounted rate.
The lawsuit names as defendants, in addition to PersonalCare, Coventry Life and Health Insurance Co., a subsidiary of Coventry Health Care, and South Care PPO.