Can a state save a health plan by taking it over?

After seizing control of non-profit insurer Alameda Alliance for Health, California state regulators are preparing to turn the helm back over to its own board. But the state will continue monitoring the insurer and requires it meets certain conditions before it can fully regain control, reported California Healthline.

The California Department of Managed Health Care (DMHC) took over Alameda Alliance, including relieving four administrators of their jobs, just more than one year ago. "We had to take it over in order to save it," DMHC Director Shelley Rouillard said at the time.

As part of the takeover, DMHC hired a conservator that completely resolved Alameda Alliance's financial difficulties and launched a new claims system. "They pretty much revamped the whole IT department," Rouillard told Healthline.

DMHC is now planning to return Alameda Alliance to local control next month--if the insurer can meet certain conditions. "We have developed a corrective action plan that describes the milestones the plan needs to meet," she said.

Those conditions include that Alameda Alliance's new claims processing system works properly, it hires a new chief operating officer and chief information officer, its employees answer the phone within 30 seconds 80 percent of the time, it holds training sessions with its employees and it verifies that provider directories are accurate.

After returning control of the insurer, DMHC will actively monitor its finances for six to 12 months.

The Iowa insurance department took similar steps as DMHC when the consumer operated and oriented CoOportunity Health plan had insufficient capital to continue operating on its own, FierceHealthPayer previously reported. CoOportunity Health ultimately ended up shutting down, however.

To learn more:
- read the California Healthline article

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