Sur­viv­ing co-op plans fret over un­healthy risk pools

Modern Healthcare - - NEWS - By Bob Her­man

With the dirt be­ing shov­eled over the re­cently col­lapsed co-op health plans, lead­ers of the re­main­ing co-ops are look­ing for ways to avoid the same fate. But many say they can’t do it with­out more fed­eral as­sis­tance and guidance.

Sick, costly pa­tients who never had health in­sur­ance, or had it only in­ter­mit­tently, have bat­tered the fi­nances of the not-for-profit co-op plans over the past two years. In many in­stances, those pa­tients re­ceived ex­pen­sive can­cer treat­ments for the first time or got a trans­plant.

Twelve of the Af­ford­able Care Act’s 23 co-ops have closed. Many of those clo­sures occurred af­ter the fed­eral gov­ern­ment an­nounced it would pay only a sliver of the pay­ments promised un­der the law’s risk-cor­ri­dor pro­gram, which was in­tended to help plans cover losses in the ini­tial years of the in­sur­ance ex­changes.

Some say the co-op col­lapse could have been avoided had con­gres­sional Repub­li­cans not stymied those pay­ments. “I think most of them could’ve weath­ered through the other prob­lems,” said Bar­bara Smith, a prin­ci­pal at con­sult­ing firm Health Man­age­ment As­so­ciates. Smith was the found­ing di­rec­tor of the co-op di­vi­sion at the CMS’ Cen­ter for Con­sumer In­for­ma­tion and In­sur­ance Over­sight, or CCIIO.

The CMS said in 2015 it would pay in­sur­ers only 12.6% of their risk-cor­ri­dor re­quests, leav­ing a short­fall of $2.5 bil­lion. Al­though the feds have promised to pay out those amounts, and many in­sur­ers could sue to ob­tain the pay­ments, much dam­age has al­ready been done.

Arches Health Plan, the ACA-funded co-op in Utah that shut down at the end of 2015, suf­fered from not re­ceiv­ing full risk-cor­ri­dor pay­ments, said Arches CEO Shaun Greene. Al­though he said Arches had a rel­a­tively healthy mem­ber base, high-cost cases ham- mered the health in­surer’s cof­fers.

Only 200 peo­ple—or 0.3% of Arches’ 63,000 mem­bers—ac­counted for 50% of its claims. On­col­ogy care and or­gan trans­plants, in par­tic­u­lar, hit Arches and other co-ops hard. Greene said there was a lot of pent-up de­mand from peo­ple who pre­vi­ously could not ac­cess af­ford­able cov­er­age or pay for their care out of pocket.

Con­sul­tant Sherri Huff, for­mer chief fi­nan­cial of­fi­cer of the still-func­tion­ing Com­mon Ground Health­care Co­op­er­a­tive in Wis­con­sin, echoed Greene’s take. By the end of Jan­uary 2014, the first full month that ACA ex­change cov­er­age went live, Com­mon Ground had 19 mem­bers re­quest trans­plants, she said.

“We saw very lit­tle of the young and healthy,” Huff said.

Arches heard from three hos­pi­tals “that in­di­cated a will­ing­ness” to pitch in money to save the co-op be­cause they viewed it as their “growth en­gine,” Greene said. But that never hap­pened be­cause reg­u­la­tors gave Arches 20 hours to eval­u­ate the deal. Greene called it a “ridicu­lous re­quest.” He also crit­i­cized the CCIIO, say­ing the agency “went from be­ing a pretty good part­ner to be­ing com­pletely er­ratic and un­re­li­able,” which he said could be partly blamed on con­gres­sional pol­i­tics.

Con­ser­va­tive states that failed to ex­pand Med­i­caid also played a role in the demise of some co-ops, lead­ers said. Utah and Wis­con­sin did not ex­pand Med­i­caid, and the co-ops in those states con­se­quently had many sick, low-in­come en­rollees who would oth­er­wise have qual­i­fied for Med­i­caid ex­pan­sion, Greene and Huff said. Many of those peo­ple bought sil­ver-level plans and re­ceived both the pre­mium and cost-shar­ing sub­si­dies. The poor­est among them had 94% of their health­care costs cov­ered by their in­surer and sub­si­dies.

“The fail­ure to have Med­i­caid ex­pan­sion ends up putting a lot of higher-need peo­ple with very chal­leng­ing cir­cum­stances into the ex­change plans,” Smith said.

The short-term out­look re­mains bleak for many of the re­main­ing co-ops and other small and mid-sized health in­sur­ers that sell ex­change plans. The re­cently signed bud­get bill in­cluded the same risk-cor­ri­dors pro­vi­sion from last year’s deal, which re­quires those pay­ments to be bud­get-neu­tral. The ACA did not re­quire the risk-cor­ri­dor pro­gram to be bud­get-neu­tral.

Still, some co-op ob­servers said the ex­changes re­main on the path to vi­a­bil­ity. They sug­gested the CMS tin­ker with the risk-ad­just­ment pro­gram and tighten the spe­cial-en­roll­ment pe­ri­ods so fewer peo­ple can hop in and out of cov­er­age. But they said the risk pool has to in­clude more of the so-called young in­vin­ci­bles who use fewer health­care ser­vices.

“The ex­pec­ta­tion was and re­mains that this would even out over the first couple years,” Smith said. “I still think that is largely the case. 2017 will be a bet­ter year for the plans in terms of ad­verse risk se­lec­tion.”

But Greene hedged. “There’s still a lot of bad risk out there, and it’s go­ing to be a few more years be­fore we see sta­bi­liza­tion in the in­di­vid­ual mar­ket.”

Sick, pa­tients costly who never had health in­sur­ance or had it only in­ter­mit­tently, have bat­tered the fi­nances of the not-for-profit co-op plans over the past two years.

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