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Humana pulls out; bad news for the valley’s smaller businesses

Brent Gardner-Smith

Humana, one of the last remaining health insurance companies to offer PPO health insurance plans to small employers in the Roaring Fork Valley, wants to pull out.

Humana Inc. intends to stop marketing and selling new PPO (preferred provider organization) health plans to groups of 50 people or less beginning April 1.

The decision will affect Humana PPO group members in 24 counties in Colorado, including Pitkin, Eagle and Garfield.

Members’ plans won’t suddenly end April 1, but will remain current until the previously set annual renewal date. And the company’s proposal must still be approved by the Colorado Division of Insurance.

However, news of Humana’s decision prompted calls of concern from employers to their insurance brokers.

“We had two calls first thing this morning from employers,” said Michael Sailor of Michael Sailor Insurance in Aspen. “This was the last PPO writing new business up here for small groups.”

Humana’s decision was based on economics, the company said.

“Current state regulations make it increasingly difficult to negotiate the agreements with hospitals and physician groups that Humana needs to run a viable business,” said Tod Zacharias, vice president of Humana’s small group division. “Humana can no longer maintain an adequate PPO network for its members in these largely rural areas.”

Humana will continue to offer PPO health insurance plans to members in 30 other Colorado counties. And it will also continue to offer traditional health insurance plans, called indemnity plans, to customers throughout the state.

PPO plans are popular with employees because they usually offer benefits such as $10 doctor visits to a network of local physicians and $10 prescription cards. Indemnity plans usually require someone to pay the full amount for a doctor’s visit or prescription and then send in paperwork to be reimbursed.

Humana said the lack of competition among hospitals in rural areas drives up health insurance costs.

“There are fewer hospitals and physician groups so there is less competition between them,” said Mark Mathis, a spokesperson for Humana. “They will not contract with us at rates that allow us to maintain a viable level of business.”

Mathis was also sensitive to the fact that many may see this as a decision by a “greedy” insurance company.

“We’ve lost $40 million in the last two years in Colorado,” he said. “That hardly sounds like greed. We have to do what we can to maintain a viable business.”

Humana company is based in Louisville, Ky., and is one of the nation’s largest publicly traded health services companies, with more than 5 million members.

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