Praeger OKs sale of PHS to Coventry

Dec. 29--Kansas Insurance Commissioner Sandy Praeger said Monday that she has approved the sale of Preferred Health Systems to Coventry Health Care.

The approval was signed Dec. 24 and follows hearings in Wichita earlier this month.

The Kansas Attorney General's Office and the U.S. Department of Justice also could weigh in, Praeger said, but "they have limited scope related really more to the competition in the market and market consolidation."

A spokeswoman for the Attorney General's Office said, "We're taking no action to block the merger."

Coventry and Via Christi Health announced in early October that they had signed an agreement for the sale of PHS, a Via Christi subsidiary.

Praeger said that Kevin Conlin, president and CEO of Via Christi Health, made a good case for the sale in one of the hearings, saying that owning an insurance company wasn't consistent with Via Christi's primary mission of providing health care.

Praeger's approval of the sale includes stipulations that Coventry has agreed to. She said they stem from concerns expressed at the first hearing, especially about MHNet, Coventry's mental health benefits administrator.

If Coventry does not abide by them, she said, the Insurance Department could impose sanctions or fines or even revoke its license.

They require that:

-- For at least one year, Coventry provides a quarterly report showing a network of providers adequate to deliver services to policyholders.

-- For one year, Coventry provides a quarterly report on its progress in improving the performance of MHNet.

-- Coventry will not give MHNet additional responsibilities for at least a year or until Praeger is satisfied that progress has been made.

-- Coventry will not make any changes in policies, rates, benefits or similar areas for at least one year, except in compliance with law.

-- Coventry immediately implements procedures to ensure timely and accurate communication with the Insurance Department on complaints, the filing of policy forms and similar processes.

-- Coventry implements procedures that ensure all required information is filed in a timely manner.

-- Coventry maintains an office in Wichita dedicated to providing services for PHS matters through 2011.

Coventry serves more than 5 million people nationwide.

Michael Murphy, president and CEO of Coventry Health Care of Kansas, will become CEO of PHS. Brad Clothier, chief operating officer of PHS, will remain in that position.

Coventry of Kansas serves all of Kansas and the western half of Missouri. It insures about 33,000 people who use the Wichita market for health care, Murphy has said.

PHS is the largest commercial insurer in the Wichita market. It has more than 100,000 commercial group risk members and 20,000 commercial self-funded members in Kansas.

Reach Karen Shideler at 316-268-6674 or kshideler@wichitaeagle.com.

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