Sinai Care is leaving claim-service business

It has struggled as insurers have bypassed middlemen

Health care

May 05, 2000|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

Cash-strapped Sinai Care, an intermediary between doctors and insurers, is no longer paying claims for the 13,000 health-plan members it serves and is getting out of business.

Chief Executive Officer Jeff Nelson said yesterday that Sinai Care in Baltimore is working with insurers to assume claim payments and expects a seamless transition for plan members.

"They should continue to go to the physician they have always gone to," Nelson said. "Each plan will make sure they are taken care of."

Sinai Care was formed in 1985 by Sinai Hospital of Baltimore and its physicians to negotiate with insurers. Insurers paid Sinai Care a fixed amount monthly for each member of a health plan, and from that pot the company settled patient claims.

Such companies make money when claims are low, but end up in the red if claims are larger and more numerous than anticipated.

Like other such organizations across the country, Sinai Care struggled as insurers starting bypassing middlemen and contracting directly with doctors, Nelson said. In a memo to doctors this week, Sinai Care officials said the organization is "experiencing a significant cash shortfall and is no longer paying claims."

Nelson would not disclose the size of the shortfall, but said the problem was discovered early. If it had continued operations, Sinai Care eventually would have had to take radical action, such as filing for bankruptcy protection, he said.

Sinai Care is the fourth such group in Maryland that has closed its doors or gone insolvent, said Steven B. Larsen, Maryland's insurance commissioner. "Many of these arrangements ultimately do not turn out to be workable," he said. "This is a pretty high failure rate."

Larsen said yesterday that some Sinai Care physicians had not been paid for a month or two.

Sinai Care recently terminated its contracts with the four insurers with which it worked: FreeState Health Plan; WellNet; Mid-Atlantic Medical Services Inc. on behalf of MDIPA and Optimum Choice; and Prudential Healthcare, which is owned by Aetna U.S. Healthcare.

Aetna spokesman Walter Cherniak said the insurer was informed April 24 that Sinai Care would no longer be paying claims.

"From our perspective, physicians' claims are going to be paid for services they deliver to our members," Cherniak said. Claims as of April 25 will be handled directly by Aetna, and earlier claims will be processed the usual way, he said.

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