Queen’s takes another
step toward dropping
health insurance

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By Lyn Danninger
ldanninger@starbulletin.com

In another move toward an eventual exit from the health insurance business, Queen's Health Management, which oversees Queen's Health Systems insurance subsidiary, did not submit a bid for a portion of the state's Quest health insurance contract, which provide benefits to 120,000 Medicaid recipients.

The company said it will discontinue its Queen's Hawaii Care on June 30, at the end of the current contract. About 50 employees face elimination, the company said, but efforts are being made to find them jobs with other Queen's companies.

"This has not been an easy task and we are deeply appreciative of our employees for their continuing dedication, perseverance and hard work," said Paul M. Yamashita, president of Queen's Health Management.

Bids for the new contract had to be submitted no later than Feb. 12 and were opened Tuesday. Bidders included Hawaii Medical Service Association, Kaiser Foundation Health Plan and AlohaCare. No new bidders entered the Hawaii market for Medicaid services for the upcoming contract, which runs three years beginning July 1, 2002. This now means that Quest members on Oahu will have three choices versus the six Quest plans that existed in 2001. Other insurers dropping the Quest business include Straub Quantum, the plan affiliated with Straub Clinic & Hospital, and Kapiolani Health Hawaii. Those plans together covered about 27,000 Quest members.

Queen's subsidiary Queen's Hawaii Care currently covers 15,000 Quest members on Oahu, the Big Island and Molokai. Queen's Health Management still retains its business processing claims for approximately 28,000 Quest members.

Queen's completed a deal in June to sell its Tricare subsidiary, which held contracts to serve 90,000 military families and retirees in Hawaii. The plan was sold to Health Net Federal Systems Inc., a managed care health insurer previously subcontracted with Queen's to process claims. About 50 Queen's Hawaii-based employees transferred to Health Net with the sale.

Queen's had been trying to sell both its Quest business and its remaining third-party administration programs. An agreement to sell the business to Lifemark Corp. of Phoenix, Ariz., was reached in September 2000 but the deal fell through early in 2001.

In 2001, Queen's divested itself of its other health plan businesses, Queen's Island Care and Queen's Preferred Plan, to local insurance carrier University Health Alliance.