Failed Health Republic co-op owes New York hospitals more than $150 million

The nonprofit co-op Health Republic Insurance of New York owes hospitals within the Greater New York Hospital Association more than $150 million, according to a November 11 letter from President Kenneth Raske to member CEOs.

"This is a dire situation -- several hospitals have reported Health Republic receivables of more than $10 million," Raske said.

The New York State Department of Financial Services, the Centers for Medicare and Medicaid Services and state regulators have ordered Health Republic to shut down as of November 30, a month earlier than a previous deadline set in October.

[Also: Health Republic Insurance co-op ordered to close over financial losses]

"A GNYHA (Greater New York Hospital Association) survey has found that our member hospitals' Health Republic receivables are significantly worse than previously anticipated," Raske said. "At a minimum, Health Republic owes GNYHA member hospitals more than $142 million, and that amount is likely to surpass $150 million."

The association is aggressively pushing the Department of Financial Services, other state officials and the CMS, to get involved, he said.

Raske said the association would also continue to seek legislative solutions, including the creation of a health insurance guarantee fund that could retroactively address the money owed to hospitals and protect providers in the event of future insurer insolvencies.

[Also: Most co-op exchange health plans losing money, OIG report says]

Insurers oppose the idea of a guaranty fund and instead believe the state should bail out failing insurers as it does failing hospitals, according to Crain's New York Business.

Raske said New York health insurers remain profitable overall, but several nonprofit plans that incurred losses in 2014 bear watching.

Health Republic was among the largest nonprofit co-ops in the country, among many formed out of Affordable Care Act initiatives to offer alternatives to the large insurance plans. However, the financial funds promised in the ACA were cut amid squabbles in Congress. Health Republic is the fourth co-op to close in recent months, according to published reports.

This fall, in a letter to members, Health Republic CEO Debra Friedman blamed the government for the financial challenges of running a co-op program.

Twitter: @SusanJMorse