Oregon's ACA co-op goes into receivership due to risk adjustment mandate

Another Affordable Care Act cooperative is going under due to the Centers for Medicare and Medicaid Services' risk adjustment mandate.

Oregon's Health Co-op is going into state receivership by court petition on Monday, according to the Oregon Department of Consumer and Business Services, Division of Financial Regulation.

The co-op lost $18.4 million in 2015, mostly driven by medical claims for individual policies, according to a statement from the department.

Last week, CMS announced the co-op owed about $900,000 to the federal risk adjustment program when the co-op was expecting to receive about $5 million from the same program, according to the Director Patrick Allen.

"Unfortunately, as a startup, Oregon's Health CO-OP is not in a position to sustain these losses while meeting its obligations to policyholders. We are working closely with the company on an orderly wind-down of its business."

[Also: HealthyCT fails under burden of risk adjustment payment, insurance commissioner says]

Oregon's Health Co-op's board of directors voted to consent to the receivership order to protect policyholders. The state intends to liquidate the troubled company's assets and help connect policyholders with new health plans. All co-op policyholder plans will end July 31.

"We understand changing plans in the middle of the year will be difficult for Oregonians, but this action was necessary given the sudden deterioration of the company's financial position," Allen said.

The exit leaves limited options for individuals and business owners looking for a new plan, according to Allen. Several insurers are discontinuing coverage in certain counties for 2017, he said.

Oregon's Health co-op, a nonprofit consumer operated and oriented plan formed under the Affordable Care Act, is the second ACA co-op in a week to close due to the federal risk adjustment mandate.

The risk adjustment program is intended to spread the risk by redistributing funds from insurers with healthier populations to those with sicker policyholders and higher claims costs.

HealthyCT in Connecticut announced last week that it would close due to owing a payment of $13.4 million.

[Also: Coordinated Health Mutual in Ohio becomes 13th co-op to fail]

As of March 31, 2016, Oregon's Health co-op has 20,600  policyholders: 11,800 in the individual market and 8,800 in the small and large group markets.

Starting Monday, July 11, individual policyholders can enroll through a special enrollment period and choose a new plan that will take effect Monday, Aug. 1, the department said.

Businesses that provide Oregon's Health Co-op plans to their employees will need to work with their insurance broker and take immediate action to find a new plan with an Aug. 1 effective date, it said.

"Today's news heightens our concern about limited options for consumers, particularly in rural areas of the state," Allen said. "In the coming months, we will be working with stakeholders to develop both short-term and long-term solutions to make it more feasible for insurers to offer individual plans throughout the state."

Twitter: @SusanJMorse