KPS Health Plans continues on its journey down the road to financial recovery. On July 5, the company announced it would issue written commitments to repay millions of dollars it has withheld from contracted health providers.

Issuing the “surplus notes,” as the IOUs are technically known, is a big step in KPS’s journey back from the abyss of bankruptcy. The notes are a formal acknowledgment by KPS that its contracted providers, including doctors and hospitals, did not receive their full reimbursement after the insurance carrier entered court-ordered receivership in August 1999. Payments were partially withheld on a prorated basis through early this year.

“This is a significant step for us because the surplus notes are a written commitment that we intend to fully pay our contracted providers,” said KPS President Elizabeth Gilje. “It’s going to be a while before we can actually pay this money back, but the surplus notes represent an article of faith to the physicians and providers who stepped forward when KPS needed them.”

The Bremerton-based insurance carrier owes approximately $6.2 million in withheld payments, to providers plus accumulated interest. The surplus notes recognize how much money is owed to each provider as well as provides a mechanism for paying them back with interest. Altogether, KPS owes $4.6 million to various providers along with $1.6 million to Harrison, Mason General and Jefferson General hospitals.

The surplus notes were sent out in concert with the state insurance commissioner’s office whose receivership team continues to oversee KPS under a rehabilitation plan OK’d on Jan. 14 by Thurston County Superior Court.

Gilje said the surplus notes will be repaid with interest once the insurance commissioner’s office determines that repayment will not cause the insurer to slip below state mandated minimum reserve levels.

KPS, which recently announced it had turned its first profit in four years, is now is fully reimbursing providers, and has been operating in the black since January.