The Maryland insurance commissioner has ordered UnitedHealthcare of the Mid-Atlantic to pay medical claims--estimated in the millions of dollars--that were left unpaid when three organizations United used to manage HMO members' care declared bankruptcy or went out of business.

Like many HMOs, United had shifted much of its financial risk and medical responsibility to middlemen that were not subject to the same regulation as HMOs or insurance companies.

The order announced yesterday by Commissioner Steven B. Larsen highlights the accountability gap those arrangements can create--and the upheaval that has resulted across the country from the collapse of many organizations that boasted they could manage medical costs better than HMOs.

United had signed contracts with Doctors Health Inc., Maryland Personal Physicians Inc. (MPPI) and Dimensions Health Network under which those organizations received fixed payments to provide a wide array of medical services to United HMO members. In turn, the middlemen typically assumed responsibility for paying doctors and hospitals to treat the patients.

The intermediaries stood to profit if they could deliver the care for less than United was paying them. But Doctors Health sought bankruptcy protection in November 1998, MPPI did the same last September, and Dimensions folded in November.

Left behind were millions of dollars of unpaid claims for United members.

Larsen ordered United to pay those claims with interest, excluding bills from health-care providers who are owners or employees of the defunct organizations.

The Maryland Insurance Administration (MIA) has authority over the HMO, but the HMO's subcontractors are beyond its jurisdiction. In a news release issued yesterday, Larsen said the HMO is legally responsible for monitoring the intermediaries' ability to pay.

United issued a two-sentence statement saying in part that "we are carefully reviewing the order and our response to it." A company spokesman said United would not answer questions.

United "initially said that once [it] paid the downstream contractor, any nonpayment issues are the problem of the downstream contractor," Larsen said. Later, United argued that its financial liability was limited to money put in reserve as part of its arrangement with a contractor, Larsen said.

In the case of Doctors Health, United put about $1.9 million in reserve, but the outstanding claims total about $2.8 million, Larsen said. United and Doctors Health have been fighting over control of the reserves.

The MIA received hundreds of complaints from doctors and other health-care providers about the unpaid bills. Unlike United, CareFirst BlueCross BlueShield agreed in November to pay such claims, Larsen said.

Under Maryland law, HMO members cannot be held responsible for the unpaid bills, MIA spokesman Elana Mezile said.

Though the total amount of claims covered by the United order is unclear, an "educated guess" is that it exceeds $10 million, said Joel I. Sher, a lawyer representing creditors in the bankruptcies of Doctors Health and MPPI. Without Larsen's order, health-care providers would have been left to seek payment from Doctors Health and MPPI in bankruptcy court, where they stood to recover less then 10 cents on the dollar, Sher said.

Dermatologist David F. Jaffe said his office was left with $22,000 of unpaid claims going back several months when MPPI sought bankruptcy protection. Since regulators intervened, Jaffe's office has recouped much of that money from CareFirst, but it is still owed $8,821 by CareFirst and $3,020 for United patients, Jaffe said.

The experience helped inspire Jaffe to burn all his HMO contracts in a barbecue last month as fellow doctors, patients and politicians looked on. "The fact that I as a practitioner am not being reimbursed for services provided ultimately affects the quality of care the patients are going to get," Jaffe said.

Larsen is planning to submit a report to the Maryland General Assembly next week recommending greater oversight of such companies as United's defunct intermediaries. But since that way of doing business is now widely regarded as a failure, "the effort to regulate these things is in large part closing the barn door after the horse is long gone," said T. Michael Preston, executive director of MedChi, a Maryland physicians group.

But that didn't stop Doctors Health from trying to collect the balance of a pediatrician's bill from the insurance commissioner's 5-year-old son, helping to pique the regulator's interest in the situation, Larsen said.