December 22, 2006

Dec. 29, 2006 UPDATE:

Michigan’s Attorney General today approved the proposed sale of the M-CARE managed care organization by the University of Michigan to Blue Cross Blue Shield of Michigan and its Blue Care Network subsidiary. The sale was also cleared in Dec. 22 by the Michigan Office of Financial and Insurance Services, and in November by the U.S. Department of Justice.

The completion of the approval process clears the way for the sale to be closed (finalized) on Dec. 31. On that date, M-CARE and its subsidiary M-CAID will become part of the Blue Care Network. M-CARE’s subsidiary, Michigan Health Insurance Corp., which administers M-CARE’s variety of preferred-provider plans or PPOs, will become part of BCBSM.

Most M-CARE employees have been offered either employment at BCN under a lease agreement from U-M, or full employment by BCN. Well over 100 employees thus far have been offered full employment positions at BCN.

The decision to sell M-CARE, first announced in September, will allow the U-M Health System to direct its resources toward its core missions of patient care, research and education. The sale will also lead to the formation of a joint venture between UMHS and BCBSM that will foster a variety of health care research and quality-improvement projects.

U-M sale of M-CARE clears state approval

Sale to Blue Cross Blue Shield of Michigan and Blue Care Network may be finalized soon; members will experience no interruption to their coverage

ANN ARBOR, MI – The proposed sale of the M-CARE managed care organization by the University of Michigan to Blue Cross Blue Shield of Michigan and its Blue Care Network has received approval from the Michigan Office of Financial and Insurance Services. Part of the sale is still under review by the state Attorney General.

The sale, which was also cleared in November by the U.S. Department of Justice, may be finalized before the end of the calendar year. M-CARE and its subsidiary M-CAID will be sold to BCN, a subsidiary of BCBSM. M-CARE’s subsidiary, Michigan Health Insurance Corp., which administers M-CARE’s variety of preferred-provider plans or PPOs, will be sold to BCBSM. The decision to sell M-CARE, first announced in September, will allow the U-M Health System to direct its resources toward it core missions of patient care, research and education.

M-CARE members will experience no interruption in their health coverage, and will receive coverage under the M-CARE name for the duration of their employer’s or group’s contract with M-CARE throughout 2007. After that, they will be able to select coverage from a variety of plans. M-CAID members will continue to receive coverage under the current Medicaid contract that M-CAID has with the state of Michigan.

U-M employees, graduate students, retirees, dependents and survivors who elected M-CARE during the recent open enrollment period will have M-CARE coverage through 2007. For 2008, the University will develop replacement health plans designed and funded by U-M and administered by the Blues.

“We welcome the state Insurance Commissioner’s approval of this sale, which will allow us to give M-CARE members and employees a smooth transition to a non-profit, community-minded, quality-oriented partner at a time when the health insurance industry is experiencing great turbulence,” says U-M Health System CEO Robert Kelch, M.D. The sale also includes the creation of a joint venture that will commission projects and research studies to improve health care.

Most M-CARE employees have been offered either employment at BCN under a lease agreement from U-M, or full employment by BCN. Well over 100 employees thus far have been offered full employment positions at BCN. Leased positions will last a minimum of 90 days; most will be of longer duration up to a year. BCN and M-CARE have conducted several onsite meetings to answer employee questions about the transition.

The UMHS Human Resources Division has opened a Career Transition Center staffed jointly by BCN and U-M to assist employees in the transition to positions at BCN, BCBSM, the University or other employers. During the next year, some employees working under the lease agreement will receive notices of 60 or 90 days depending on length of service, under U-M’s Reduction in Force policy and the federal Worker Adjustment and Retraining Notification Act.

Further information and updates on the sale, and background information on M-CARE, is available online at www.med.umich.edu/mcareupdate. M-CARE members may also e-mail custserv@mcare.org or call M-CARE Customer Service at 734-913-2211, or 800-658-8878, Monday through Friday between 8 a.m. and 5 p.m.

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