A bankrupt self-insured health plan for 2,500 physician practices and other small businesses says it doesn't have enough money to pay out medical claims, NJ.com reported Aug. 19.
Affiliate Physicians & Employers Master Trust, which filed for bankruptcy in May, said that it will need a bailout from policyholders to help pay its debts. Companies insured by the trust are expected to pay their share of the debt. The share will be determined based on a percentage of claims submitted from January to July, according to the report.
The trust said it filed for bankruptcy this spring because of increased pandemic-related costs, including testing and treatment claims. The trust said it owes about $10 million.
In July, the trust asked the New Jersey governor for $18 million in pandemic relief funds, saying the money would have allowed the trust to pay its debts and maintain a surplus required to continue operating as a health plan in the state. The governor didn't respond to the request, according to the report.
"Unfortunately in the coming weeks, the revenue … will not be sufficient to reimburse Aetna for the claims that it is paying on behalf of the employees of the members. Therefore we regretfully must advise that there likely will be interruptions in the payment of employee medical claims," a July 20 letter sent on behalf of the bankrupt health plan reads. "Through the assessment and other efforts, we hope to be in a position where ultimately all employee medical claims are paid."
The trust is a multiple employer welfare arrangement, an alternative to traditional group plans. They are often cheaper because they aren't required to pay into a fund that protects policyholders if the health plan is unable to meet its financial obligations.