Many co-ops are faltering from both losses and fees under the ACA’s Risk Adjustment program. Risk adjustment payments aim to temporarily level the financial playing field for payers absorbing newly insured, costlier members. Chicago-based Land of Lincoln shut down Tuesday and left 49,000 uninsured in light of the $31.8 million it owes in risk adjustment fees. Last week, state regulators also closed Portland, Ore.-based Oregon’s Health Co-op and Wallingford, Conn.-based HealthyCT over risk adjustment payments, leaving a combined 63,000 uninsured.
The remaining co-ops — all posting losses in 2015 — are initiating strategies to stay afloat.
Here are six survival mechanisms some co-ops are implementing:
1. Diversifying and selling beyond individuals and small businesses. Albuquerque-based New Mexico Health Connections is expanding its client base to include larger employers and labor groups, like teacher unions.
2. Renegotiating contracts with hospitals and providers. Lewiston, Maine-based Community Health Options recently contracted with St. Louis-based Express Scripts in hopes of curbing drug costs by $14 million.
3. Increasing investor revenue. New Mexico Health Connections is also seeking funds from investors, which the government recently allowed co-ops to do, Kaiser Health News reported.
4. Raising premiums. Most co-ops requested premium rate increases by at least 10 percent for 2017, according to the report. Helena-based Montana Health Co-op requested a 22 percent increase for individual plan premiums after losing about $40 million in 2015.
5. Suing the federal government. Baltimore-based Evergreen Health Cooperative is required to pay $24.2 million in risk adjustment fees, and is suing the federal government over the payment. The fee represents more than a quarter of the payer’s $85 million premium revenue this year.
6. Decreasing administrative costs. Montana Health Co-op has also not filled vacant positions and employs about 20 full-time administrative staff members.
More articles about payer issues:
BCBS of Wyoming seeks 7% increase to premium rates
Metamark expands network to BCBS of Texas
Illinois insurance co-op latest to close, leaving 49,000 uninsured
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