Two Michigan carriers have worked out a deal to rescue the state’s ability to run a homegrown Pre-existing Condition Insurance Plan (PCIP) program.

Priority Health, Grand Rapids, Mich., averted a possible PCIP administrative crisis by agreeing to let Physician’s Health Plan (PHP) of Mid-Michigan, Lansing, Mich., serve as the sole Michigan PCIP program administrator, according to officials at the Michigan Office of Financial and Insurance Regulation.

The federal Affordable Care Act (ACA) – the legislative package that includes the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act – created the $5 billion PCIP program fill in coverage gaps before a nationwide ban on medical underwriting is set to take effect in 2014.

The PCIP program is supposed to provide individuals with serious health problems access to coverage at rates comparable to individual rates in the commercial Michigan PCIP program market.

The program is open to individuals with serious pre-existing conditions who have been uninsured for at least 6 months

Some states are letting the new federal Office of Consumer Information and Insurance Oversight (OCIIO) run their PCIP programs, but a majority will be running their own risk plans.

Michigan has received a PCIP budget allocation of $141 million, or about enough money to provided subsidized coverage for a few thousand state residents with serious health problems.

Michigan officials originally had planned to oversee the Michigan PCIP program. They awarded Priority Health and PHP program management contracts.

The Michigan Legislature upended those plans by failing to act to let the state spend the federal PCIP funds, officials say.

Michigan officials decided to let OCIIO, part of the U.S. Department of Health and Human Services, manage the Michigan PCIP program, but OCIIO officials would work with only one vendor in each state.

“Priority Health, which was originally selected to provide coverage in a majority of the state’s counties, understood the significance of having a Michigan job provider as the pool administrator,” Ken Ross, the Michigan insurance commissioner, says in a statement. “Priority Health graciously stepped back and allowed PHP to be the program administrator.”

PHP hopes to begin enrolling applicants Aug. 31 and have coverage start Oct. 1.

Applicants can show they are eligible to buy coverage by getting a doctor’s letter certifying that they suffer from one of several dozen conditions on the state’s list of serious health conditions, or by providing a health insurance coverage application denial issued within the previous 6 months.