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New York speeds up PPACA CO-OP shutdown

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State and federal regulators announced that they are teaming up to shut down Health Republic Insurance of New York on Nov. 30, rather than letting the company stay open until the end of the year.

Meanwhile, in Arizona, managers of Meritus Health Partners and Meritus Mutual Health Partners say they believe that their companies meet all state standards and are opposing an order for supervision requested by Arizona Director of Insurance Andy Tobin.

Health Republic of New York

The New York State Department of Financial Services, New York’s state-based health insurance exchange, and the Centers for Medicare & Medicaid Services (CMS) said they want to transition the company’s individual and group coverage enrollees to new coverage earlier than expected because a “review of Health Republic’s finances has found that the company’s financial condition is substantially worse than the company previously reported in its filings.”

About whether the company will have enough money to pay claims, officials said regulators “are working to protect those insured under Health Republic policies and to make sure claims are paid to the maximum extent possible.”

Health Republic of New York is one of the nonprofit, member-owned Consumer Operated and Oriented Plan (CO-OP) carriers started with loans from the Patient Protection and Affordable Care Act (CO-OP) program. Organizers received a total of $265 million in CO-OP program loans.

Health Republic of New York ended 2014 with 155,402 enrollees, or about one-fifth of New York state individual market enrollees, but it lost $35 million on $529 million in revenue, according to a report from the U.S. Department of Health and Human Services Office of Inspector General and the U.S. Government Accountability Office (GAO).

The New York financial services department, the New York State of Health exchange, and CMS announced Sept. 25 that Health Republic would stop writing new policies but that the company would continue to pay claims on in-force policies until the end of the year.

An unnamed Health Republic of New York broker relations manager said today in a broker conference call that group deductibles will re-set, but that insurance regulators are asking other insurers to give holders of individual Health Republic policies credit for the portions of their deductibles that they have already met. 

The manager said he knew the producers on the call would be in a mad scramble to re-write Health Republic business, and would have many questions.

“Regretfully,” he said, “we do not have all the answers.” Company managers will get more information out as soon as they have more information, the manager said.

Later, the company said in a statement that the PPACA risk corridors program funding shortfall has created an insurmountable financial gap and makes winding company operations down early a prudent decision.


In Arizona, Tobin said that the ability of Meritus to write new policies or renew existing policies has been suspended, and that CMS has removed Meritus plans from the Arizona section on the exchange enrollment system.

Tobin said he is now the supervisor of the Meritus companies under state law and will oversee both companies.

The Meritus companies will pay claims until the end of the year, and eight other companies will offer individual exchange policies in Arizona for 2016, officials said. Three companies will offer exchange group coverage in Arizona.

Meritus received $93 million in PPACA CO-OP loans. It ended 2014 with 869 enrollees and lost $7.2 million for 2014 on $5 million in revenue, according to the GAO and HHS OIG reports. The company said in its annual report that its own figures show that it ended 2014 with about 4,000 individual enrollees, and that it now has about 59,000 enrollees. 

See also: PPACA risk corridors gap rocks more carriers

“The Meritus entities have yet to make a profit and have lost over $78 million since their inception,” Arizona officials said in the supervision announcement.

Tom Zumtobel, the chief executive officer of Meritus, said in a statement that the company transferred about $4 million to the Arizona department to assure that there is no risk to policyholders, but that he believes the company has been in compliance with all state regulatory and statutory financial guidelines.

“We were caught off guard” by the request to put Meritus in receivership, Zumtobel said. The company has been working closely with regulators for the past few months, then was given just an hour to respond to the receivership ruling, he said. “We couldn’t get feedback from [the Department of Insurance] on what specifically we needed to do.”