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Rivals of Community Blue's new health-insurance option badly misrepresented it in public, a top official complained today at a special state hearing on the plan.

Thomas P. Hartnett, president of Blue Cross and Blue Shield of Western New York, defended the company's new "Advantage" option, insisting that it does not exclude five area hospitals from participation. He also said the company is willing to negotiate with some 600 Western New York doctors who have been excluded from the coverage.

Hartnett was the first witness at a joint hearing by the Assembly Health and Insurance committees held in the Buffalo Common Council chambers.

"The door is not closed . . . The plan is not cast in stone," Hartnett said, responding to sharp questioning from Assembly members, including the chairmen of the joint hearing, Richard N. Gottfried and Alexander B. Grannis, both Manhattan Democrats.

"It (the option) was badly misrepresented before it even got out in the marketplace by some people that didn't want to see it become successful," Hartnett said.

Hartnett did not name the plan's detractors but acknowledged that there has been "some tension" between Community Blue and health-care providers, including some doctors.

According to Hartnett, the plan is the same as the present company HMO offering, with additional options on co-payments and benefits, including additional dental and eye care.

Advantage was designed using "business decisions" about which area hospitals could meet the company's cost and volume goals, Hartnett said. And he repeated that Community Blue is willing to negotiate provider contracts with any of the five hospitals that are not involved in the plan, including Buffalo General.

Deputy Assembly Speaker Arthur O. Eve, D-Buffalo, questioned Hartnett about possible company plans to offer health-care services in the future, which would put it in direct competition with hospitals and doctors.

"The callousness of your attitude that everything is based on pure business is frightening . . . You'll have the ability to determine who's going to grow and who's not. That is a major concern to us," Eve told the witness.

Hartnett responded that the health-care industry is a "rapidly changing environment" that now blurs the lines between insurance companies and health-care providers, encouraging them to consider merging functions.

But he denied that the company has frozen out certain hospitals and doctors, saying the company's customers can still chose to use them by remaining with the present Community Blue HMO offering.

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