March 20, 2000
FOR IMMEDIATE RELEASE
CONTACT: CHRISTOPHER GOETCHEUS
(617) 521-7333


GOVERNORS CELLUCCI, ALMOND ANNOUNCE AGREEMENT
HARVARD PILGRIM RECEIVERSHIPS IN BOTH STATES
WILL COORDINATE EFFORTS

(BOSTON, MA) Massachusetts Governor Paul Cellucci and Rhode Island Governor Lincoln Almond today announced that state officials have reached an agreement to streamline the administration of Harvard Pilgrim Health Care's receiverships in both states in an effort to lower costs and protect medical providers. Officials in both states say the agreement should eliminate unnecessary litigation and uncertainty for providers and members of Harvard Pilgrim on both sides of the Massachusetts-Rhode Island border.

"The key element of this agreement is that providers in all states where Harvard Pilgrim's network of health care providers operates will be treated the same," said Governor Paul Cellucci. "Medical providers to HPHC-Rhode Island will receive 100 percent of the monies owed them by Harvard Pilgrim."

"With this agreement between Rhode Island and Massachusetts, Rhode Island providers will be paid in full. That means one hundred cents on the dollar," said Governor Lincoln Almond. "That is an accomplishment we can all be very proud of because no one ever thought we would see this day. With a lot of hard work, we have come a long way."

Harvard's Rhode Island subsidiary was put into receivership by officials in that state last October and ordered liquidated in January. Insurance Commissioner Linda Ruthardt, the Massachusetts Temporary Receiver of Harvard Pilgrim, said under the agreement, suspended payments to Rhode Island providers will now resume. HPHC-Massachusetts will guarantee the payment of 100 percent of HPHC-Rhode Island's provider and member claims both before and after the Rhode Island receivership began.

HPHC-Massachusetts will also assume responsibility for managing HPHC-Rhode Island's medical records. These services will be performed with the Rhode Island Receiver and at a cost of no more than $5 million. Another provision will result in HPHC-Massachusetts depositing $14.5 million in a Rhode Island depository to secure its obligation.

Commissioner Ruthardt noted that it is expected that HPHC-Rhode Island's assets will be more than sufficient to pay the remaining providers and member claims. According to the agreement signed in principle by Ruthardt and Rhode Island Receiver Thomas Schumpert, any surplus will be returned to HPHC-Massachusetts.

"While there is still some work to do to complete a final pact, the news is good for the Bay State's Harvard Pilgrim members and providers," Ruthardt said. "The agreement provides comfort that Harvard Pilgrim can concentrate on its turnaround plan rather than expend time and money in protracted litigation that might otherwise result from the Rhode Island liquidation."

"The agreement has a provision to keep administrative costs for the liquidation of HPHC-Rhode Island as low as possible, freeing up more assets to pay member and health care provider bills," Ruthardt said.

Also today, Ruthardt and Massachusetts Attorney General Thomas Reilly are expected to formally file their plan of rehabilitation with the Massachusetts Supreme Judicial Court.