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Sunday, November 18, 2001


Hawaii’s new health
insurance company
gains its first contract

HMA Inc. will process claims
for a hotel and restaurant
employees' union trust fund


By Lyn Danninger
ldanninger@starbulletin.com

The newest entrant into Hawaii's health insurance market has secured its first contract, with Hotel Employees and Restaurant Employees Local 5 trust fund.

Arizona-headquartered HMA Inc. and its local management company, Hawaii Health Management Solutions Inc., will likely take over the contract to process the health insurance claims of the 17,000-member trust fund contract on Jan. 1, pending final contract details, said Paul Tom, president of Benefit Plan Consultants, the brokerage and consulting firm working with the trust fund.

"We've reached a tentative agreement on the pricing that's now subject to a mutually agreeable contract," Tom said.

Four companies, including local insurer Alohacare, submitted bids for Local 5 trust fund contract, Tom said.

In addition to Local 5, two other union trust funds in the coming months will be considering a change in the company administering their health insurance claims, Tom said.

"The other two trust funds are considering their options," he said.

Local 5 and the two trust funds, for the Teamsters and electricians unions, total about 28,000 members and are currently served by ailing health insurer University Health Alliance.

Apart from its administration business, UHA also has about 32,000 covered members in its other health plans. The company earned around $1.7 million last year in exchange for claims processing and other administrative services provided to the three trust funds.

HMA declined to reveal the value of the new contract with Local 5.

The move by Local 5 to HMA should not be a significant financial setback for UHA, according to state Insurance Commissioner Wayne Metcalf, who has been seeking for some months to sell the company.

Earlier this year, UHA fell $2.3 million short of the financial reserve level required by the state, and then entered into a supervisory agreement with the state Insurance Division. Since June, a court-appointed rehabilitator has been overseeing operations while the state sought a buyer.

Metcalf said he doesn't believe the switch to HMA will significantly affect negotiations for a new buyer for UHA.

"Negotiations are continuing with several parties and the parties are aware of Local 5's decision to go with the new company," he said.



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