MedPartners Inc., whose California health plan was seized and placed into bankruptcy last month by state regulators, has agreed to pay all of its debts in the state and continue funding its 117 clinics here until they are sold.
The deal, which state officials say resolves the issues that triggered the takeover last month, takes steps to ensure that MedPartners' 1.3 million patients in California keep their regular doctors and that physicians and hospitals will be paid.
In exchange, the state will step back from its aggressive oversight, replacing its tough-minded conservator and changing the conservator's role to supervising, rather than running, the operation. The reduced oversight puts the company back in charge and severely lessens the possibility that regulators will question its past accounting practices.
As part of the deal, which was reached in principle late Friday, the state would gain oversight of the company's clinics, which provide care for about 900,000 Californians.
The health plan itself, a "middleman" that contracts with health-maintenance organizations and distributes funds for health care to doctors and clinics, will be gradually liquidated over the next year.
But to ensure that the patients covered by the plan, MedPartners Provider Network, continue to receive care from their regular doctors, the state's major HMOs have agreed to allow patients to remain at the company's clinics.
The company would not be released from the bankruptcy, but would be allowed to resume control over day-to-day operations and represent itself in bankruptcy court.
The agreement eases concerns among HMOs contracted with MedPartners that if the clinics went under or became unstable, they would be forced to switch patients to new providers.
"The one thing I worried about in all of this was that our members would find themselves without their regular doctors," said Cora Tellez, president and chief executive of Health Net, a managed-care company with 2.2 million members in California.
Still, Tellez was not prepared to say fully that the problem had been solved, echoing concerns by others in the industry and by the powerful California Medical Assn., which represents doctors.
There might be problems in selling the clinics, Tellez said. Or MedPartners might renege on its promise to pay all the bills, said Jack Lewin, chief executive of CMA.
