Conditions recommended as part of PHS sale

The Kansas Insurance Department's staff recommends approval of the sale of Preferred Health Systems to Coventry Health Care, a staff member said today.

But Kenneth Abitz, director of the department's Financial Surveillance Division, said the approval should come with seven conditions.

Abitz was one of three witnesses — the other two were Coventry officials — at a fact-finding hearing as part of Insurance Commissioner Sandy Praeger's consideration of the sale.

Two hours had been scheduled for the hearing; it was over in 35 minutes with routine questions and answers about whether the sale would have any negative or adverse effects. Always, the answer was "no."

Coventry and PHS announced the planned sale in early October. It could be completed by the end of the year or soon thereafter.

Abitz said these conditions should be part of a sale:

* For at least a year, Coventry provide a quarterly report showing a network of providers adequate to deliver services in a timely manner to policyholders.

* For at least a year, Coventry provide a quarterly report on its progress in improving the performance of MHNet, its mental health benefits administrator. Problems with MHNet were noted in a public hearing Monday.

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

* Coventry not make any changes in policies, rates, benefits and similar areas for at least a year, except in compliance with law.

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

* Coventry immediately implement procedures that ensure all required information is filed in a timely manner.

* Coventry maintain an office dedicated to providing services for PHS matters at least through Dec. 31, 2011.