- About Us
State likely to take financial control of KPS
"Kitsap Physician Services consumers are at risk every day because the company is in poor financial health, officials at the state Office of the Insurance Commissioner said Thursday.State law requires KPS to hold $3 million in capital reserves. It has $500,000. Because of that disparity, the state plans to take the insurance provider over on Monday.But KPS was still trying to maintain financial control earlier this week. The company has undergone several plans to rehabilitate its finances over the last three years, including raising rates in 1998. This week, the board moved to cut three health plans, eliminating KPS coverage for nearly half of its 71,000 enrollees.The insurance commissioner agreed with KPS earlier this year that if its finances did not get better by Aug. 2, they would jointly go to court and file for receivership. That means the insurance commissioners office will assume financial control over the company.But KPS moved Tuesday to avoid those consequences. Though the KPS board has yet to release specific details, KPS Chief Executive Officer Robert Schneidler said it voted to cut health insurance plans for 30,000 of its enrollees after a general membership meeting Tuesday night. It does not make sense for us to continue to fund those programs out of our reserves. We are not going to ask enrollees in commercial plans to subsidize those programs, Schneidler said. The intent is to preserve the service relationships that we have with enrollees commercial and federal plans.The boards decision was news to the state Office of the Insurance Commissioner, who started monitoring KPSs financial health about 18 months ago, chief deputy insurance commissioner Robert Harkins said. We were very surprised and disturbed when (news of the Tuesday meeting) appeared, Harkins said. (The board) had this meeting with some of their doctors. Even now, I dont know what they are supposed to have decided.Harkins cautioned that what he knew of the KPS board decision to cut programs came from press reports. Without further detail, he said the reported plans sound troubling. We have real grave concerns that the plan wont get them what they want, and we cant delay. Every day they are losing more money and every day the risk is higher for consumers and doctors, he said.KPSs recovery plan has two main planks:Eliminating three state health insurance plans that both KPS and the insurance commissioners office say are the main source of the companys ill finances. The 30,000 individuals subscribe to one of three state insurance plans the board voted to axe: Healthy Options, which covers Medicaid patients; Public Employees Benefit Board, which covers state employees and retirees; and a program that covers the working poor.This plank shrinks KPS enrollees by more than a third of its 80,000 consumer base in Kitsap, Mason, Clallam, Jefferson and Thurston counties. Two of the state plans KPS is looking to cut affect Washingtons poorest residents. One provides coverage for employed people who earn less than 200 percent of the poverty level. The other covers Medicaid recipients.The KPS board asked its 325 member physicians to cough up $2.5 million to fill in the shortfall in the companys reserve capital. Member physicians have stepped up, as they appropriately should, to make sure our enrollees are taken care of, Schneidler said of the decision.But Harkins said that sounds dubious. I find it very difficult to believe that a number of doctors would choose or could afford ... to have their cash flow automatically stop, Harkins said. One of the number one concerns we hear is nonpayment doctors cant afford to carry a bill for months and months. The whole plan is subject to approval by the insurance commissioner. Harkins said the plan might not fare well. KPS is not a big enough company to absorb those losses without damaging its financial health dramatically. ... This is the latest in a series of proposals that so far, every proposal they have put on table has not passed muster. They have continued to lose money, he said.Regardless of the actual plan, he said the insurance commissioner intends to go to court per the written agreement. "