Updated 1:50 p.m. with news release
The largest manager of health care for low-income D.C. residents is on the cusp of finalizing a sale, but the transaction could leave tens of millions of dollars of medical bills in limbo.
Court papers filed Friday ask a judge to approve the sale of Chartered Health Plan’s most valuable assets to Philadelphia-based AmeriHealth Mercy for $5 million. AmeriHealth Mercy, which has been in talks with Chartered for months, will not assume the company’s major liabilities. Those include unpaid medical claims that could total $40 million or more, according to two officials familiar with the transaction but not authorized to speak publicly.
Chartered, owned by businessman Jeffrey E. Thompson, was placed in city receivership by insurance regulators last October and has been in the public eye since Thompson became embroiled in campaign finance investigations nearly a year ago. It manages the health care for more than 100,000 D.C. residents.
The receiver, Daniel L. Watkins, said in a statement that the AmeriHealth sale is the best option “to achieve the various goals and needs of the city, Chartered and its Medicaid customers, one that can guarantee the least disruption and best results for the District’s Medicaid market.”
The proceeds from the sale to AmeriHealth Mercy are not expected to cover the full cost of the unpaid claims, the officials said, leaving it unclear how providers — including local hospitals, clinics and doctors — will be paid for care they have provided.
The agreement is predicated on AmeriHealth winning a health-care-management contract with the city similar to the one Chartered long enjoyed, according to the court filings. The company is prepared to pump at least $30 million into the new company should the deal come to fruition. Most Chartered employees will stay on under the new ownership, according to court filing.
One city official said AmeriHealth is among the vendors that have been preliminarily selected to receive contracts; the proposed awards are expected to be sent to the D.C. Council for final approval in the coming weeks.
Besides the sale proceeds, Chartered is hoping to recover as much as $60 million form the city through a contract appeal seeking reimbursement for what it considers illegally low Medicaid rates. But the city is fighting the appeal, and it is unclear how quickly the dispute might be settled.
In the meantime, one of the officials said, it is likely that medical providers will lobby the District government to pay the outstanding bills itself.
Michael Flagg, a spokesman for the city insurance department, and Wayne Turnage, the city health-care finance director, declined to comment Friday morning. A conference call with city officials is set for 3 p.m.