Nevada insurance regulators are citing questions about the collectability of payments from the new Patient Protection and Affordable Care Act (PPACA) risk corridors program as one reason to put a struggling health maintenance organization (HMO) into rehabilitation.
Amy Parks, Nevada’s acting insurance commissioner, has filed a petition with a state court in Nevada seeking court permission to become the receiver for the carrier, Nevada Health CO-OP, and begin rehabilitation proceedings.
Nevada Health CO-OP is one of the nonprofit, member-owned carriers formed with startup loan money from the PPACA Consumer Operated and Oriented Plan (CO-OP) money. Because the CO-OP is organized as an HMO, it has not been eligible to join the Nevada Life and Health Insurance Guaranty Association, according to an affidavit included with the petition.
Nevada set up a severely troubled state-based PPACA exchange, and exchange plan issuers in the state, including the CO-OP, complained early on that they were having trouble getting even basic information about the number of enrollees they had.
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The CO-OP now has about 21,000 enrollees, up from 14,000 in 2014.
The CO-OP had total admitted assets of about $48 million on June 30, total liabilities of about $41 million, and about $7.1 million in capital and surplus. It reported a $30 million net loss for the first half of the year.
Annette James, an actuary who helped examine the CO-OP, said in an affidavit included with the petition that she noted when reviewing the CO-OP’s financial statements that the “significant and continuing underwriting losses experienced by the CO-OP” indicate that “the premiums charged were insufficient.”
The company’s operating loss for the first half is greater than 50 percent of the CO-OP’s surplus, and the loss is likely to reduce the CO-OP’s capital and surplus level below the statutory minimum.
The CO-OP has about $15 million in unpaid claims, or about $700 in unpaid claims per enrollee.