When the insurance plan Ken Fuirst offered to the employees of his small business was renewed in September with slightly changed rates and better coverage, he thought it was too good to be true.
It turns out, he was right.
“Our insurance renewed in September and all the rates were going up but Health Republic seemed to have a very, what turned out to be, too attractive of an offer,” Fuirst said. “We went from delivering very good news to our employees in September to having to 180-degree turn in November.”
Fuirst, president of the property and casualty insurance firm Levitt-Fuirst Associates LTD in Yonkers, had 18 employees insured with Health Republic Insurance of New York through a small group plan, but the state Department of Financial Services and federal Centers for Medicare and Medicaid Services announced Sept. 25 that Health Republic would be winding down by the end of the year.
In November, Health Republic”™s financial situation was determined by the agencies to be worse than initially realized and all policies would end Nov. 30. Those with small group plans would need to find a new insurer before December and individual customers would be automatically enrolled into new plans for coverage in December, but need to find a new plan for 2016.
Health Republic was one of 23 consumer-operated and -oriented plans, shortened to co-ops, created around the country through the federal Affordable Care Act to make insurance marketplaces more competitive. Twelve of those co-ops no longer exist, which is in part due to promised federal funds that were not disbursed after getting cut from the budget.
Fuirst said he had to tell his employees they were no longer covered and would need to pick a different plan that would likely be significantly more expensive.
“It caused tremendous stress to everyone involved, employees, especially those who had certain doctors (and) had made changes back in September,” he said. “I think the DFS has been very transparent, but it moved much quicker than anyone had expected because initially they said the small groups were not going to be impacted.”
Fuirst”™s business is one of 9,784 small groups that were insured with Health Republic in Westchester County and have started looking for new insurance carriers.
North Shore-LIJ CareConnect Insurance Company Inc., headquartered in East Hills, is one of many insurers looking to draw former Health Republic customers. And so far, that has overwhelmingly been the case, according to the network”™s president and CEO Alan J. Murray.
“In November, CareConnect had approximately 29,000 commercial members and we more than doubled for Dec. 1,” Murray said. The majority of those small group enrollees, he said, had been Health Republic members.
Murray said the quick turnaround to get customers insured was also a challenge for CareConnect, whose network includes Mount Kisco Medical Group, Phelps Memorial Hospital Center, Montefiore Health System and Westmed Medical Group.
“We”™re talking about a population that lost their coverage and are both nervous and fairly desperate to get a security blanket,” he said.
From an operations perspective, Murray said CareConnect employees were working overtime in order to field the increased number of calls, process applications and get new member information and cards sent in the mail.
“While I think we did a good job, we still had a lot of nervous consumers,” he said.
And consumers aren”™t the only ones feeling anxious.
Hospitals, physicians and other health care providers have yielded hundreds of millions of dollars in unpaid claims across the state from the roughly 200,000 people once covered by Health Republic.
Kevin W. Dahill, president and chief executive officer of the Suburban Hospital Alliance of New York State LLC, wrote a letter to the state Department of Health and Human Services earlier this month to express the group”™s concerns about unpaid claims.
“While we understand that the state”™s most urgent priority was ensuring continuing coverage for Health Republic”™s members, there has been no direct communication from the state to providers about how to manage this transition or how the state intends to address unpaid claims,” the letter said.
The alliance, which includes 51 hospitals in the Hudson Valley and Long Island, said in the Dec. 4 letter that nearly $100 million is owed in reimbursements from the insurer.
Health Republic also owes $265 million in federal loans that were lent to get the co-op off the ground.
The state Department of Health and Human Services did not reply to requests for comment.
A spokesman with the state Department of Financial Services said in an email: “The department is working to ensure the orderly wind down of the company and preparation for a liquidation proceeding to make sure claims are paid to the fullest extent possible allowed by available assets.”
The mitigation efforts made by the state include hiring an independent monitor to take over the management of Health Republic as it closes shop, automatically enrolling individual customers into plans with comparable coverage for the month of December, and extending this month”™s open enrollment deadline date for coverage in 2016 to Dec. 19 from Dec. 15.
The Department of Financial Services is also investigating the accuracy of Health Republic”™s financial reporting.
