Chicago-based Land of Lincoln Health will be placed under state control and shut down — leaving 49,000 uninsured — in light of the $31.8 million it owes under the Affordable Care Act's Risk Adjustment program, the Chicago Tribune reported.
ACA's Risk Adjustment Program aims to temporarily level the financial playing field for payers absorbing newly insured, costlier members. The Illinois Department of Insurance determined the $31.8 million fee, in addition to $90 million in losses last year, made future operations unfeasible.
"It's a bad day for the marketplace in Illinois and our consumers," Land of Lincoln President and interim CEO Jason Montrie told the Chicago Tribune. "This is the end."
Last week, the insurance department's Acting Director Anne Melissa Dowling ordered Land of Lincoln to hold the payment until the insurer received $70 million it is owed through the risk adjustment program. CMS ultimately did not agree with Ms. Dowling's request, the Chicago Tribune reported. Land of Lincoln sued the government in June for withholding the risk adjustment payment.
Tuesday Ms. Dowling requested the Illinois attorney general petition an order of rehabilitation to Cook County Circuit Court requiring healthcare providers to honor contracts with the insurer. Ms. Dowling would oversee the insurer and its claim payments if the petition is granted.
Illinois said policyholders will be able to purchase alternative coverage before their plans terminate. Though the exact termination date is unclear, policyholders will need to find a new plan by year's end. Ms. Dowling said she will help establish a special enrollment period through the Illinois exchange.
Seven of the original 23 co-ops created under the ACA remain. Portland, Ore.-based Oregon's Health Co-op went into receivership status Friday and will close its doors in light of $900,000 it owes in risk adjustment payments. Last week Wallingford, Conn.-based HealthyCT was placed under an order of supervision by the Connecticut Insurance Department, immediately prohibiting its sale or renewal of health plans and leaving 40,000 uninsured.
More articles about payer issues:
Narrow networks fuel provider, insurer billing fights
Majority of Ohio marketplace consumers to receive subsidies
Insider: NY regulators conditionally OK Aetna-Humana deal