Officials reviewing PrimeHealth documents Business linked to Young could lose HMO status

March 28, 1998|By Walter F. Roche Jr. and Scott Higham | Walter F. Roche Jr. and Scott Higham,SUN STAFF

Maryland insurance officials said yesterday that they will spend the weekend reviewing documents delivered by PrimeHealth Corp. to determine whether the Lanham-based company should continue to operate in Maryland as a health maintenance organization.

In the midst of two grand jury investigations of former Sen. Larry Young and his ties to health companies such as PrimeHealth, the Maryland Insurance Administration ordered a sweeping review of the company last month.

Young and others lobbied top state officials in an effort to get for PrimeHealth a contract from the health department, which sought a state rule change and a federal waiver that enabled the company to work in Maryland. State officials said they helped PrimeHealth to make sure that a minority-owned company participated in Maryland's managed-care Medicaid program.

Insurance Commissioner Steven B. Larsen extended to yesterday a deadline for PrimeHealth to answer questions about the ownership of the company and its financial stability. Larsen said the company delivered documents late yesterday and that agency officials will review them before making a decision.

PrimeHealth's attorneys declined to discuss the documents filed late yesterday or to answer questions about the corporation. A Georgia-based doctor recently asked by PrimeHealth to take a leadership role at the company also declined to provide any new details about the business.

The Insurance Administration has several options:

It could take no action; revoke PrimeHealth's license; subject the company to tougher and more frequent financial reporting standards; or order that its Medicaid payments be placed in escrow, where they could be closely monitored by the state.

The state Department of Health and Mental Hygiene has reviewed contingency plans to ensure that about 12,300 Medicaid recipients enrolled in PrimeHealth keep their coverage and that their medical bills are paid if the company's operating license is revoked.

PrimeHealth received a license from the Insurance Administration more than a year ago, despite questions about its ownership and the serious debts -- including state and federal tax liens -- of a closely affiliated company, Diagnostic Health Imaging Systems Inc.

Diagnostic Health donated its assets, including X-ray equipment, Prime-Health, helping it meet minimum state requirements for a license. The liens and other debts stayed with Diagnostic Health.

The latest Insurance Administration review of PrimeHealth was prompted by the criminal investigations of Young, a West Baltimore Democrat who was expelled from the Senate Jan. 16 for blending his public office with his outside business interests.

PrimeHealth gave at least $31,475 to corporations Young ran out of his Baltimore legislative office. Grand jurors recently issued subpoenas seeking documents from Young's corporations, PrimeHealth, the health and insurance departments, and the office of Gov. Parris N. Glendening.

Pub Date: 3/28/98

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