Land of Lincoln Health may owe the ACA risk-adjustment program $32 million. (Image: Wikimedia Commons)

The Illinois Department of Insurance has started the process of putting Land of Lincoln Mutual Health Insurance Co. in rehabilitation, officials announced earlier this week.

Organizers used loans from the Affordable Care Act Consumer Operated and Oriented Plan program to start the nonprofit, member-owned carrier. The carrier has about 49,000 enrollees, officials said.

Related: Small health plans: ACA program may kill us

Anne Melissa Dowling, the department’s acting director, said she has asked the state attorney general to file a rehabilitation petition in state court.

The department has not said how long it expects the CO-OP to continue to operate.

If and when the court enters a rehabilitation order, the CO-OP “will temporarily continue to operate under the director’s supervision,” officials said. 

The CO-OP will continue to pay claims while the director works with the Centers for Medicare & Medicaid Services, the federal agency in charge of the CO-OP program, to establish a 60-day special enrollment period, so that enrollees can find new coverage, officials said.

The announcement appears to indicate that the CO-OP may close before Dec. 31.

CMS announced June 30 that the CO-OP can expect to get about $18 million, or about $370 per enrollee, from the ACA reinsurance program, a temporary program that helps carriers pay the bills of individual coverage holders with catastrophic claims, but that it may owe the ACA risk-adjustment program about $32 million.

The risk-adjustment program is supposed to use cash from plans with enrollees with relatively low health risk scores to help plans with enrollees with high risk scores.

Another ACA program, the ACA reinsurance program, owes Land of Lincoln Health about $70 million for 2014 risk corridors program obligations. Congress blocked the U.S. Department of Health and Human Services, the parent of CMS, from using any funding source other than cash from ACA exchange plan issuers that do well to pay risk corridors program obligations. CMS said HHS expected to receive only enough cash from thriving issuers for 2014 to pay about 13 percent of the 2014 obligations.

Illinois regulators tried to protect Land of Lincoln Health and its enrollees by prohibiting the carrier from making the risk-adjustment program payment until CMS makes the risk corridors program payment. CMS did not allow the suspension of the risk-adjustment program payment obligation, Illinois officials said in the rehabilitation order announcement.

Related:

Oregon’s Health CO-OP to close July 31

Ohio to liquidate CO-OP

Have you followed us on Facebook?