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Blue Cross Blue Shield of Michigan and Blue Care Network in Final Talks With U-M Health System to Purchase M-CARE Health Plans

Posted on: Tuesday, 12 September 2006, 15:01 CDT

DETROIT, Sept. 12 /PRNewswire/ -- Blue Cross Blue Shield of Michigan and its HMO subsidiary, Blue Care Network of Michigan, are in final talks with the University of Michigan Health System to purchase M-CARE, which is based in Ann Arbor, Mich.

Both organizations have similar histories. BCBSM has a long heritage of commitment to nonprofit health care and service to the state, going back 67 years. U-M has these same commitments and values.

"We are mutually committed to each other's nonprofit missions," said Daniel Loepp, BCBSM president and CEO. "This is an opportunity for the university to sell M-CARE to a nonprofit partner that it can be confident will continue M-CARE's nonprofit mission."

The sale is being considered by the U-M Board of Regents on Sept. 22. Subsequent regulatory approvals at the state and federal levels also are needed.

BCN will purchase the M-CARE HMO and M-CAID, its Medicaid business. BCBSM will purchase Michigan Health Insurance Corp., M-CARE's PPO subsidiary.

The transaction includes a joint venture that will benefit the state in exciting ways. The joint venture will include initiatives that benefit BCBSM and BCN customers as well as projects that will promote the health and well- being of Michigan residents by creating a partnership to advance health care by joining two Michigan institutions, U-M and BCBSM, with similar nonprofit missions of service.

The venture recognizes the success of current quality improvement projects that involve U-M researchers and receive resource support from BCBSM, including an award-winning project that has helped save lives and dollars by reducing complications in angioplasty patients at hospitals across Michigan.

Kevin Seitz, BCN president and CEO and BCBSM senior vice president for subsidiary operations, said the proposed sale is a good business decision that benefits both parties.

"It joins the resources of a well-respected health care organization with a nationally renowned academic leader in health care," Seitz said. "It enhances our competitiveness, offering long-term value to our customers, members and participating providers. It continues the U-M commitment to state- of-the-art care."

The organizations pledge to make the transition as seamless as possible. M-CARE's current employees would continue in their roles until the sale is final. Once the sale is final, many M-CARE employees will remain under a lease arrangement by U-M to provide services to BCN. After that, employees will be assisted in transitioning to positions at BCN, BCBSM, others areas of U-M or the community. The number of employees to be retained has not yet been determined.

Seitz said the intent is for the purchase to positively impact M-CARE's customers.

"We want them to continue to be our customers and have positive experiences," Seitz said. "We intend to hold fast for all 2007 M-CARE rates and renewals, and then give customers a seamless experience in transitioning to Blues coverage. We believe this transition will create value for our customers in 2008 and beyond."

U-M employees, graduate students, retirees and dependents currently enrolled in M-CARE plans will continue with their current coverage through 2007, after which U-M will offer a Blues product that is customized to meet its specific needs and provide the same level of benefits and choice as the current plan offerings.

The vast majority of physicians, hospitals and other health care providers that currently participate in the M-CARE provider network are also part of the Blues networks. M-CARE provider contracts will still be in effect when the sale closes, including M-CARE's contract with U-M physicians, health centers and hospitals.

BCBSM and BCN were advised by MTS Health Partners, L.P., on this transaction.

Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit and independent licensees of the Blue Cross and Blue Shield Association. For more company information, visit http://www.bcbsm.com/ or http://www.mibcn.com/ .

Blue Cross Blue Shield of Michigan

CONTACT: Helen Stojic of Blue Cross Blue Shield of Michigan,+1-313-225-8113

Web site: http://www.bcbsm.com/http://www.mibcn.com/

Source: PRNewswire

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