Where Have All the CO-OPs Gone?
With deepest apologies to Pete Seeger, there is a tune running through my head this week (albeit with my own words): “Where have all the co-ops gone? Long time passing…gone due to bad policy, every one….when will they ever learn? Oh, when will they ever learn?”
On July 1, 2016, the Insurance Commissioner of Connecticut placed an order of supervision on HealthyCT, a physician-owned nonprofit Consumer-Oriented and Operated Plan (CO-OP) insurer, formed in 2011 under the Affordable Care Act (ACA)’s health insurance program.1 This order of supervision basically tells HealthyCT to stop selling new and renewing existing insurance policies, and to gradually wind down operations when existing policies expire.
This was very important news to me, because HealthyCT is my own health insurance plan, and I was appointed to its Board of Directors at the beginning of the year. This is also very important news for the people and providers in Connecticut, as well as for individuals and providers nationally, because of the trend it represents.
First, although I do serve on the Board of Directors of HealthyCT, the following comments are my personal observations and are solely derived from publicly available information and press releases.1
CMS’s Risk Adjustment Program Affecting Small CO-OPs
HealthyCT, like many of the smaller insurers created under the ACA, was presented with an untenable situation on June 30, 2016, when the Centers for Medicare & Medicaid Services (CMS) announced in its report on risk adjustment for 20152 that it would ask HealthyCT to pay $13.4 million to CMS following the risk adjustment program.
In a July 5, 2016, press release, the Insurance Commissioner of Connecticut noted, “Unfortunately HealthyCT’s financial health is unstable, having been seriously jeopardized by a federal requirement…that it pay…as part of the Affordable Care Act’s Risk Adjustment Program. As a result, it became evident that this risk adjustment mandate would put the company under significant financial strain.”1
The ACA created the opportunities for such new insurance programs by requiring a national reconciliation that insurers with healthier members make payments back to the government to be redistributed to insurers with sicker, costlier members.3 Evergreen Health Cooperative, an insurer in Maryland, sued the federal government in mid-June over that risk adjustment, or financial redistribution, program. Evergreen alleges in the suit that the method for determining how much companies pay or receive under that program favors older, more well-established companies and puts smaller, newer insurers at a disadvantage, in part because of the fewer historical claims available for the newer plans.4
Of the 23 nonprofit CO-OP insurers that were established under the ACA, only 7 remain fully functioning.5 Why is this important to oncology practices and their patients? I had searched many options before choosing HealthyCT as my personal health insurance carrier.
I was not looking for exchange plans created under the ACA, which are subsidized for each beneficiary based on the gold, silver, and bronze levels. I was looking for a good, individual insurance plan. I also knew and respected some of the physicians and administrators in the leadership of HealthyCT. They offered exchange plans, but more than 50% of their plans were targeted for the commercial and private individual markets. I was very happy with the coverage and policies of this insurer.
But now, thanks to a financial redistribution formula set up under the ACA, this insurance will no longer be available to me and to approximately 40,000 other people in Connecticut. Several of the other remaining 9 CO-OPs are also being hit with substantial repayment demands to CMS under this 2015 Risk Adjustment Report—Land of Lincoln Health in Illinois owes CMS >$31 million, Oscar health insurance in New Jersey and in New York owes approximately $33 million, and New Mexico Health Connections owes >$14 million.2
Implications for Oncology Practices
What does this mean for oncology practices and patients?
- Accurate, timely billings
Generating timely and accurate billings the first time is essential for practices that provide services to these CO-OPs. No matter how they have been affected by the 2015 Risk Adjustment Report, it is always a matter of good policy to make sure that claims go out the door within days of the date of service. Delayed and/or inaccurate billing heightens the risk that other factors may interfere with timely payment.
- Patient insurance verification
Practices should be diligent about verifying patients’ insurance, but if the insurer is about to undergo a significant market change that affects its members, practices would be well advised to monitor the local news carefully and flag patients whose insurance plan is likely to undergo a change in the next year.
- Insurer communication
Practices have the right to reach out to health insurance plans undergoing a market change, to make sure that they are in close contact with the right team to manage claims and any potential patient issues. Insurers such as HealthyCT are likely to be very proactive themselves as they continue to serve their existing members, but practices can also be supportive and proactive.
- Understand the marketplace
The political landscape and elements of the ACA and other legislative actions affect patients, providers, and payers. Staying informed about these mandates, as well as the changes resulting from them, will allow a practice to be an effective advocate for its patients and its business when questions arise and the opportunity presents itself.
We can also be appropriately vocal on behalf of ourselves as patients and the healthcare community as practices. In just a few years we have seen an entire cadre of nonprofit, well-intentioned and well-designed CO-OP insurers respond to the call for innovative insurance models.
We are also seeing them destroyed by the very law that created them. To repeat the chorus from Pete Seeger’s famous words, “When will we ever learn?” Mandates in healthcare and ill-conceived policies can be far more destructive than intended. The pain is real and often local when that happens.
- State of Connecticut Insurance Department: Katharine L. Wade Commissioner. Insurance department places HealthyCT under order of supervision: moves immediately to safeguard co-op’s 40,000 policyholders. Press release. July 5, 2016. www.ct.gov/cid/cwp/view.asp?a=1269&Q=582452. Accessed July 8, 2016.
- Centers for Medicare & Medicaid Services. Summary report on transitional reinsurance payments and permanent risk adjustment transfers for the 2015 benefit year. June 30, 2016. www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/Downloads/June-30-2016-RA-and-RI-Summary-Report-5CR-063016.pdf. Accessed July 8, 2016.
- Kautter J, Pope GC, Ingber M, et al. The HHS-HCC risk adjustment model for individual and small group markets under the Affordable Care Act. Medicare Medicaid Res Rev. 2014;4:E1-E46.
- PR Newswire. Evergreen Health sues federal government regarding flawed risk adjustment methodology. Press release. June 13, 2016. www.prnewswire.com/news-releases/evergreen-health-sues-federal-government-regarding-flawed-risk-adjustment-methodology-300283798.html. Accessed July 8, 2016.
- Galewitz P. Seven remaining Obamacare co-ops prepare survival strategies. Kaiser Health News. July 13, 2016. http://khn.org/news/seven-remaining-obamacare-co-ops-prepare-survival-strategies/. Accessed July 14, 2016.