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Joint Press Release

September 22, 2006

U-M Board of Regents approves sale of M-CARE to Blue Cross Blue Shield of Michigan & Blue Care Network

Coverage to be maintained for all members during transition and beyond

U-M employees: no benefits change for 2007, and new plans for 2008 will have costs and structure similar to current M-CARE plans, says UMHS’ Kelch

ANN ARBOR, MI – The University of Michigan Board of Regents today approved the sale of the University’s M-CARE health plan to Blue Cross Blue Shield of Michigan and its subsidiary, Blue Care Network of Michigan.

M-CARE Update
View the Regents action item
Details on the Joint Venture
Additional facts about M-CARE

The sale price is $240 million, with up to $10 million more being committed by BCBSM to launch a new joint venture with U-M that will commission research and projects aimed at improving health care across Michigan. The negotiated price was reached based on independent analysis and the valuations of comparable transactions.

MCARE logoM-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. It is anticipated that the sale, which requires regulatory review at the state and federal levels, could be finalized by the end of 2006 or in early 2007.

BCBSM logo“This sale to the Blues enables the health system and the university to make a smooth transition with a non-profit, community-minded, quality-oriented partner, at a time when the health insurance industry is experiencing great turbulence,” says U-M executive vice president for medical affairs and UMHS CEO Robert Kelch, M.D. “I’m especially excited about the creation of the joint venture, which holds the potential to improve the quality, efficiency, safety and appropriateness of health care throughout Michigan.”

“The sale enables the university to sell M-CARE to non-profit partners that it can be confident will continue M-CARE’s non-profit mission,” said Daniel J. Loepp, president and CEO of BCBSM.

The sale calls for M-CARE members to continue to receive health plan coverage under the M-CARE name through the Blues for the duration of their — or their employer’s — contract with M-CARE. This includes any renewals that occur before the sale is finalized. After that, they will be able to select coverage from a variety of high-quality offerings from BCBSM. M-CAID members will continue to receive coverage under the current contract that M-CAID has with the state of Michigan.

The more than 60,000 University of Michigan employees, graduate students, retirees, dependents and survivors currently enrolled in M-CARE plans will continue with the same 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 to serve faculty, staff, retirees, dependents and survivors. These will be similar to the current M-CARE offerings, and will be in addition to the other health plan choices offered by the University.

During the University’s Open Enrollment period, which begins October 9, faculty, staff and retirees will be able to choose from the same range of M-CARE plans that have long been available, as well as from other plans offered by the University.

“We will oversee the benefit design and the network, and ensure that any replacement plans are the same as, or better than, the current M-CARE plans,” says Kelch. “Though it’s too soon to know the precise cost of our plans for 2008, the sale of M-CARE will not increase the cost of our health plans. We are committed to offering a competitive benefits program designed by U-M so we may continue to recruit and retain the very best faculty and staff.”

The 400 U-M employees who work for M-CARE will receive a retention incentive to remain until the sale is finalized. Once the sale is final, many M-CARE employees will be retained by U-M, providing services to Blue Care Network under a lease agreement for a period of time through the transition. After that time, employees will be assisted in transitioning to positions at BCBSM, Blue Care Network, other areas of U-M, or the community.

U-M will apply its Reduction in Force policy and the federal Worker Adjustment and Retraining Notification Act will be followed, which provides for a notice of 60 or 90 days, depending on length of service.

“As this process continues, both U-M and the Blues will be able to offer M-CARE’s employees more specific information about what the transition period and immediate post-sale period will mean for them,” says Kelch. “We appreciate their patience and their continued hard work through this transition.”

The sale includes the creation of a joint venture which will be formed shortly after the sale is finalized, with equal representation from BCBSM and U-M on its governing board. The entity, which does not yet have a name, will build on the existing association between BCBSM and UMHS in the area of health services research and quality-improvement projects. It will commission projects and research studies on any area of health care in which there is opportunity to improve the delivery of services, get the right care to the right person at the right time, prevent medical errors, reduce risks, avoid unnecessary treatment, or get more value for dollars spent.

Further information and updates on the proposed sale, and background information on M-CARE, is available online at www.med.umich.edu/mcareupdate. That site also includes information for M-CARE employees, members, providers and other audiences.

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. The deaf or hard of hearing may call 800-649-3777 for TTY/TDD service.

Blue Cross Blue Shield of Michigan and Blue Care Network are independent licensees of the Blue Cross and Blue Shield Association.

For more information, contact:
U-M: Kara Gavin, kegavin@umich.edu, 734-764-2220
BCBSM/BCN: Helen Stojic, hstojic@bcbsm.com, 313-225-8113

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