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Troubled Maxicare Agrees To Sell Medicaid HMO For $15 Million

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NU Online News Service, Aug. 14, 1:15 p.m. – Maxicare Health Plans Inc., Los Angeles, says its bankrupt California health maintenance organization subsidiary has agreed to assign its Los Angeles County Medicaid HMO contract to Care 1st Health Plan, Alhambra, Calif., for $15 million.

Maxiciare says the subsidiary has also agreed to assign responsibility for its Sacramento HMO contract to a subsidiary of Molina Healthcare Inc., Long Beach, Calif., for $900,000.

The California HMO subsidiary is involved with bankruptcy proceedings in the U.S. Bankruptcy Court in Los Angeles.

The Los Angeles and Sacramento agreements “are subject to approval from regulatory agencies as well as the United States Bankruptcy Court, and there can be no assurance that all necessary approvals will be given,” Maxicare says.

Enrollment figures for the Maxicare Medicaid HMO in Sacramento were not immediately available, but Maxicare reported in April, in an annual financial statement filed with the SEC, that 78,000 of its remaining 240,000 California members were enrolled in its Los Angeles County HMO.

“Our Medicaid business in Los Angeles County is currently our only profitable unit,” Maxicare warned in a note to the financial statement

The deal value given in the Care 1st announcement amounts to an average of about $200 for each member in the Maxicare Los Angeles Medicaid HMO.

Maxicare previously announced plans to shut down its Medicare HMO programs in Riverside and San Bernardino counties. It will be shutting down its Medicare HMO programs in Los Angeles and Orange counties Aug. 31.

Maxicare is continuing to consider “various options” for the disposition of the California HMO subsidiary’s remaining commercial operations, the company says.


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