Fall of Arches Health Plan leaves hospitals in the lurch

Utah arched rock formation and snow-covered ground

The demise of Utah nonprofit insurer Arches Health Plan has left hospitals waiting on about $33 million in unpaid claims--and has led its former CEO to question how the state’s insurance department handled the situation.

The consumer operated and oriented plan was dissolved eight months ago, according to the Deseret News, after struggling with financial difficulties similar to those experienced by a host of other CO-OPs created under the Affordable Care Act.

Indeed, part of what hastened its collapse was the fact that Arches received just $1.9 million of the $11 million it expected in federal risk corridors payments due to shortfalls in the program that have prompted lawsuits from other insurers.

Former Arches founder and CEO Shaun Greene tells the publication that he ultimately respects the decision to liquidate Arches, but questions how the Utah insurance department went about it. In particular, he says the department caused policyholders--including three large school districts--to drop coverage, robbing the CO-OP of millions of dollars it could have used to pay back hospitals.

Insurance Commissioner Todd Kiser, though, tells the Deseret News that he stands by the fact that it was too risky to encourage policyholders to stick with Arches as it struggled financially.

For the hospitals waiting for reimbursement, the prospects also look grim. Arches’ remaining $17.8 million in assets will cover only a little more than half of what the providers are owed.

After learning that previously expected federal payments wouldn’t materialize after all, Kiser now says the plan is to pay for Arches’ shortfall by assesses Utah’s seven other HMOs, including SelectHealth, Molina and Aetna. The department hopes to pay back outstanding claims by the first half of 2017.

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