Qualmed Leaves Inland Northwest Insurer Also Sells Basic Plan To American Family Care

Another insurance company hits the road.

QualMed has notified insurance agents and state regulators that it’s leaving Eastern Washington and Idaho by April 30.

The company signed deals to transfer its 33,000 health insurance customers in Eastern Washington to the region’s largest health insurance company - MSC/Premera Blue Cross - and its 5,000 North Idaho customers to Blue Cross.

These 38,000 people get their health insurance through their employers, who have the final say on whether they switch to MSC/Premera Blue Cross or another company. Still, QualMed’s departure likely strengthens the position of MSC/Premera, the secondlargest health insurance company in the state.

QualMed also is selling its Medicaid and Basic Health Plan operations to American Family Care of Long Beach, Calif., for an undisclosed sum. That sale transfers care for 42,000 poor in Eastern Washington under American Family’s umbrella.

Insurance regulators in both states are expected to approve the sale and transfers.

Industry sources predict this means layoffs for some of QualMed’s 250 Washington employees, including 100 in Spokane and 150 in Bellevue.

American Family Care isn’t saying how many QualMed workers it may pick up.

“We need to identify our staffing needs,” said Irene Doti, spokeswoman for American Family Care. “However, we know that QualMed has an excellent, skilled employee base and it is our hope to retain as many employees as necessary to assist us in operating our new entity.”

American Family Care has about 200,000 customers in California, Utah and Michigan. It describes itself as one of the few family-owned, physician-managed health care companies. American Family Care deals almost solely in administering Medicaid coverage for the poor in the states it operates.

The news of QualMed’s departure rekindled physician concerns about fewer and fewer health insurance companies serving the area.

“It’s just another evidence of the growing consolidation of the health care market in Eastern Washington,” said Dr. Rod Trytko, president-elect of the Spokane County Medical Association. “We believe that it will ultimately have an adverse effect on the quality of care and choices consumers have.”

The Washington State Medical Association passed a resolution at its annual meeting last weekend opposing any further consolidation involving MSC/Premera or the state’s largest health insurance company, Regence Blue Shield.

“We have seen the mergers and acquisitions going on for the last two years,” said Jim Stevenson, spokesman for the Washington Insurance Commissioner’s office. “So larger health insurers keep getting larger and smaller ones keep getting gobbled up.”

Friday’s announcement means that Foundation Health Systems, owner of QualMed, has now pulled out of or announced its departure from eight states where its operations aren’t profitable enough: Colorado, Utah, New Mexico, Oklahoma, Texas and Louisiana as well as Washington and Idaho.