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Ore. regulator considers coverage extension for failed health co-op's policyholders


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Ore. regulator considers coverage extension for failed health co-op's policyholders

Oregon'sinsurance department is hoping to avoid forcing nearly 12,000 people to find newhealth insurance, following the abrupt collapseof the state's consumer operated and oriented plan.

Stateofficials are searching for options that would allow the co-op's individual policyholdersto keep their coverage and current deductibles, even as the company is put intoreceivership, spokesman Jake Sunderland said in an interview. If the agency canfind a viable solution, it could prevent people from having to find a new healthplan by the end of the month.

The OregonDivision of Financial Regulation seized Oregon'sHealth CO-OP on July 8 over concerns about its financial stability.At the time, it planned to halt coverage for both small group and individual policyholdersJuly 31. All of the company's customers would be pushed into a special enrollmentperiod, during which they would have to purchase coverage from a different insurer.

Yet thestate is now looking for ways to minimize that disruption. While the co-op's 8,800small group policies are still scheduled to terminate at the end of the month, Sunderlandsaid Oregon's insurance department is telling its roughly 11,800 individual policyholdersto hold off on finding new plans.

"We'reworking around the clock to see if there's possibly any other option to help membersother than forcing them into a special enrollment period," he said.

Sunderland declined to specify what options are under consideration,saying only that the department is "thinking creatively." Oregon's HealthCO-OP President and CEO Phillip Jackson declined to comment, citing legal constraintstied to the co-op's receivership.

There is some precedent for keeping a failed co-op's policyholdersfrom having to purchase new plans. New York regulators in 2015 struck a with three insurance companiesto take on policyholders from collapsed co-op Health Republic Insurance of New York Corp., allowing customersto receive credit for any amount of their deductible that they had already met.Individuals receiving treatment for a life-threatening or degenerative and disablingcondition, as well as those in the later stages of pregnancy, were also allowedto stay with their current provider for a short period.

To implement a similar plan, Oregon regulators would likely firsthave to win approval from the rest of the insurers participating in the state'sindividual market, who would otherwise be free to compete for the co-op's membersduring a special enrollment period. But a direct enrollment scheme might be viewedfavorably by insurers as a more orderly transfer of risk, compared with a specialenrollment mechanism that companies have faultedfor upsetting membership projections and driving medical expenses higher.

The scramble for a solution comes after a rapid deteriorationin Oregon's Health CO-OP's capital position over the past couple of months, drivenby a spike in claims costs in May and June and a surprise $913,948.34 chargelevied through the Affordable Care Act's risk adjustment program.

"It turned a slow-burning situation, in which there wasa chance of viability, to an emergency and a crisis," Sunderland said, addingthat state officials are now trying to determine whether the company has enoughmoney to even make it to July 31.

Oregon's Health CO-OP had struggled over the past several monthswith its claims processing, a source familiar with the company's activities said,creating a backlog that is likely contributing to uncertainty over how much capitalthe co-op has left and what it might end up owing over the next few weeks.

Still, Oregon's Health CO-OP earlier in 2016 felt optimisticthat it could turn a profit if it could survive until the next open enrollment period,said the source, who requested anonymity to discuss the co-op's internal activities.The company's narrow-network product had performed better than expected, and executiveswere hoping to expand on that success.

Oregon's Health CO-OP in May said it would workwith provider group OHSU Partners to develop a separate narrow network plan for2017. The company had discussed forming similar ventures with other providers aroundthe state, the source said.

Yet the co-op's liabilities overwhelmed it before it could getto that point. Oregon's Health CO-OP had expected to receive about $5 million fromthe risk adjustment program, which would tide it over for the next few months. Whenthat failed to materialize, regulators stepped in.

"They went from expecting approximately $5 million to owing$900,000, and that's a big swing for a small company with small membership, no accessto capital and already-low capitalization," Sunderland said.