| On Friday, June 16, KPS Health Plans made its second payment on surplus notes to 355 local healthcare providers, bringing the total amount of re-payments made by the local health insurance carrier to $1,969,994.
The payment was made possible in part by the $19 million capital infusion brought to KPS by Group Health after the HMO provider assumed control of KPS in October 2005. Part of the terms of the transfer agreement with Group Health was a three-year repayment plan for those providers.
“KPS is very pleased to have reached the financial stability to repay our providers,” said Elizabeth Gilje, president and CEO of KPS “Our provider surplus note holders have now received five-sixths of the principal owing on the notes. The provider note holders were there for KPS when KPS’s future appeared dim. We’re repaying the providers who supported us in our time of need.”
KPS owed a significant amount on surplus notes to a number of area physicians who accepted promissory notes in lieu of payment when KPS first went into receivership in 1999. KPS began its repayment commitment to providers in November 2005. The second repayment installment last month was based on KPS reaching a prescribed “net income corridor” of 1.75 to 4.5 percent net income to total revenue. Repayments equal one-half of the net income corridor.
Whether the surplus notes will be paid off in full is dependent on how KPS performs in the next year or so. If all goes according to plan, the repayment period will continue for another two years as long as KPS reaches the net income corridor for 2006 and 2007.
“Full repayment of the provider note principal is our primary goal for 2006 and 2007,” said Gilje. | 
