As we know, federal risk adjustment payments are tied to losses and market share.
Moral is, a company with a relatively small percentage loss, but many members, is entitled to more money than a small company with a large percentage loss.
So, relatively small CareConnect owes $53.3M for the first 6 months of 2016, after a $41M operating loss, on top of 2015's $13.3M risk adjustment payment.
Keep in mind, they collected around $150M total for the first six months of 2016. They're paying out over 30% of collected premium in risk adjustments alone, while running at a 130% loss ratio.
No surprise, they're threatening to pull out of the marketplace.
Our lawmakers' genius idea is to set up a "market stabilization pool". Basically, they'll look at the company performance and the risk adjustment, and if they determine it's an issue, they'll make the recipient of the federal funds pay into the pool, which would then pay the adversely impacted company.
Yes, you read that right, they're re-distributing the risk adjustment payment via a secondary pool. Essentially, refunding it, while creating a heck of an administrative burden.
Official press release, with the full text of the emergency regulation, is publicly available on the DFS website: Press Release - September 9, 2016: DFS Issues Emergency Regulation to Address New York Factors Necessary to Remedy Adverse Impact of Federal Risk Adjustment Program on New York Health Insurers
Moral is, a company with a relatively small percentage loss, but many members, is entitled to more money than a small company with a large percentage loss.
So, relatively small CareConnect owes $53.3M for the first 6 months of 2016, after a $41M operating loss, on top of 2015's $13.3M risk adjustment payment.
Keep in mind, they collected around $150M total for the first six months of 2016. They're paying out over 30% of collected premium in risk adjustments alone, while running at a 130% loss ratio.
No surprise, they're threatening to pull out of the marketplace.
Our lawmakers' genius idea is to set up a "market stabilization pool". Basically, they'll look at the company performance and the risk adjustment, and if they determine it's an issue, they'll make the recipient of the federal funds pay into the pool, which would then pay the adversely impacted company.
Yes, you read that right, they're re-distributing the risk adjustment payment via a secondary pool. Essentially, refunding it, while creating a heck of an administrative burden.
Official press release, with the full text of the emergency regulation, is publicly available on the DFS website: Press Release - September 9, 2016: DFS Issues Emergency Regulation to Address New York Factors Necessary to Remedy Adverse Impact of Federal Risk Adjustment Program on New York Health Insurers