Thousands of seniors are left scrambling
A Southern California insurance company’s financial woes are sending thousands of seniors in Santa Clara and San Joaquin counties scrambling for health care coverage amid the ongoing coronavirus pandemic.
More than 10,000 people in the two counties enrolled in Vitality Health Plan’s Medicare Advantage option — insurance that provides expanded Medicare coverage — after it began serving the area in January 2019, attracted by good benefits and promises of inexpensive medication. But for many, the company’s offerings turned out to be too good to be true.
“If my parents were on the plan, I would move them,” said Patricia Salas, president of SBHIS Insurance Services, a company that enrolled elderly residents in Vitality’s supplemental Medicare plan and is now hustling to help them find alternatives.
The main issue is Vitality’s dire financial situation. The company is required to maintain what’s called tangible net equity — basically a few million dollars in financial reserves. Yet, as of this summer, according to the Depar tment of Managed Health Care, the company had negative working capital and owed more than $ 15 million in unpaid provider claims and payments. That figure is now roughly $17 million, according to Vitality.
As a result, a number of local hospitals and surgery centers — including Regional Medical Center, Good Samaritan Hospital, El Camino Hospital, O’Connor Medical Center, St. Louise Medical Center, Los Gatos Surgery Center, Bascom Surgery Center and Silicon Valley Surgery Center — have terminated or announced plans to terminate their agreements with Vitality. That means plan members can’t go to the facilities for non- emergency care unless the centers agree that there are extenuating circumstances, such as necessary post- op care.
W hile some who’ve dealt with the company blame it for overpromising what it could deliver, Vitality’s president, Brian Barry, insists it is a victim of circumstance. With Medicare Advantage programs, he said, “the government pays the health plans based on the health diagnoses of its members, which must be first obtained by the physicians and eventually submitted to Medicare. In Vitality’s case, we had an enormous amount of new members and we couldn’t get a high enough percentage of those members to see their doctor to be diagnosed.
“Consequently, Medicare paid Vitality a lower amount each month for many members whose health diagnoses went underreported,” Barry said. “The lower-than- expected revenue led to losses each month.”
The state has issued a cease and desist order that prevents Vitality from enrolling new members and scheduled a hearing for late April 2021 that could ultimately end the company’s license to operate. In the meantime, seniors on the plan are left trying to navigate a confusing, bureaucratic web — fearful that they’ll need to delay important medical procedures or switch doctors.
“There’s anxiety in the senior community anyway because of COVID, and everything else that’s happening,” Salas said. “They just want someone to look them in the face and tell them things are going to be OK.”