The Oregon Department of Consumer and Business Services is putting a major player in the state’s health insurance market, Moda Health Plan Inc., under an order of immediate supervision.
Oregon regulators believe they have to take immediate action because the health service contractor reported a $31 million net operating loss for the first three quarters of 2015.
Based on the latest loss data, Moda needs $64 million in capital and surplus to stay in business, but it ended the third quarter with just $53 million in capital and surplus, according to an order issued Thursday by the Oregon department.
The department told Moda to show them, within seven calendar days, how it will get a big enough of an infusion of capital to support its 2016 business, and to give them a business plan by the end of the day Friday, January 29, 2016, indicating how the company “can be a viable going concern beyond Dec. 31, 2016, without need for further capital infusions,” according to the order.
If Moda’s capital and surplus total falls below $17.5 million, the department director “will petition for Moda to be placed under immediate rehabilitation,” according to the order.
Under the order, the department is requiring Moda to stop selling new health coverage policies or renew existing policies. The department is also requiring the company to “budget its operations to eliminate unnecessary or excessive expenses.
The Oregon department has appointed Laura Cali, the state’s insurance commissioner, to supervise Moda.
In a press release, the department said it will start working with Moda to transfer individual market plans to another carrier.
Company representatives were not immediately available to comment on the news.
Oregon Dental Service (ODS), a nonprofit mutual benefit carrier affiliated with the Delta Dental dental plan family, started the carrier as ODS Health Plan Inc. The company changed its name to Moda Health in 2013. It helped promote the brand by arranging a sponsorship deal that changed the name of home of the Portland Trail Blazers basketball team to Moda Center.
The major medical coverage arm was selling coverage in Oregon, Alaska, California and Washington state at the beginning of 2015. The state announced plans in October to withdraw from California and Washington because of concerns about its finances.
The company noted at the time that it was on track to get only $11.3 million of the $89.5 million it was supposed to receive from the Patient Protection and Affordable Care Act (PPACA) risk corridors program, a program that was originally supposed to protect exchange plan issuers against disappointing results during the first three years of exchange operations.
Congress has required the U.S. Department of Health and Human Services (HHS) to use cash from thriving exchange plan issuers to help the struggling issuers, and it has declined to let HHS use any other funding sources to make up for a shortfall in the amount of payments coming from thriving issuers.
Oregon has a state-based PPACA exchange that uses the HealthCare.gov enrollment and administration systems. Moda has been one of several sources of individual coverage in that state.
In Alaska, which lets HHS provides all exchange services through HealthCare.gov, Moda has been one of just two sources of exchange plan coverage. The only remaining provider of 2016 exchange plan coverage in Alaska is Premera Blue Cross Blue Shield.
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