Regents approve sale of M-CARE

The Board of Regents Sept. 22 approved the sale of M-CARE to Blue Cross Blue Shield of Michigan (BCBSM) and its subsidiary, Blue Care Network (BCN) of Michigan.

The sale price is $240 million, with up to $10 million more being committed by BCBSM to launch a new joint venture with U-M that will commission research and projects aimed at improving health care across Michigan. The negotiated price was reached based on independent analysis and the valuations of comparable transactions.

M-CARE and its subsidiary, M-CAID, will be sold to BCN.

The M-CARE subsidiary, Michigan Health Insurance Corp., which administers a variety of preferred-provider plans, or PPOs, will be sold to BCBSM. It is anticipated that the sale, which requires regulatory review at the state and federal levels, could be finalized by the end of 2006 or in early 2007.

"This sale to the Blues enables the health system and the University to make a smooth transition with a nonprofit, community-minded, quality-oriented partner, at a time when the health insurance industry is experiencing great turbulence," says Dr. Robert Kelch, executive vice president for medical affairs and UMHS chief executive officer. "I'm especially excited about the creation of the joint venture, which holds the potential to improve the quality, efficiency, safety and appropriateness of health care throughout Michigan."

"The sale enables the University to sell M-CARE to nonprofit partners that it can be confident will continue M-CARE's nonprofit mission," says Daniel J. Loepp, president and chief executive officer of BCBSM.

The sale calls for M-CARE members to continue to receive health plan coverage under the M-CARE name through the Blues for the duration of their (or their employer's) contract with M-CARE. This includes any renewals that occur before the sale is finalized. After that, they will be able to select coverage from a variety of high-quality offerings from BCBSM. M-CAID members will continue to receive coverage under the current contract with the state of Michigan.

The nearly 79,000 employees, graduate students, retirees and dependents currently enrolled in University plans will have the option to select M-CARE during Open Enrollment for coverage through Dec. 31, 2007. For 2008, the University will develop replacement health plans designed and funded by U-M and administered by the Blues to serve faculty, staff, retirees, dependents and survivors.

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