Illinois tries to block CO-OP’s risk adjustment payment

Stop sign in front of an empty field

Illinois is trying to block the state’s consumer operated and oriented plan (CO-OP) from having to make a payment to the federal risk adjustment program that would lead it into insolvency.

In a letter to the Centers for Medicare & Medicaid Services, acting Illinois Insurance Commissioner Anne Melissa Dowling said she was suspending Chicago-based Land of Lincoln Health’s $31.8 million risk adjustment payment to CMS.

The insurer would have to be liquidated immediately if it had to make the 2015 risk adjustment payment before receiving its risk corridor payments from 2014 and 2015, the letter says. That would “trigger marketplace disruption and extreme financial harm” to the insurer’s 49,000 policyholders, Dowling writes.

Land of Lincoln Health lost $90 million in 2015 and another $17 million as of the end of May, the Associated Press notes. However, a healthcare consultant tells the news service that Dowling’s order is unlikely to be effective, as federal law supersedes state law.

Land of Lincoln is not the only CO-OP to take issue with the risk adjustment program. Connecticut’s insurance commissioner said this week that a multimillion dollar risk adjustment payment forced HealthyCT out of business. And Maryland’s Evergreen Health has sued the Obama administration over the program.

For 2015, individual market plan issuers in the lowest quartile of claims costs, on average, were assessed a risk adjustment charge of approximately 12 percent of total collected premiums, the government has reported, and those in the highest quartile of claims costs received a risk adjustment payment of about 11 percent of their total premiums.

- here’s the letter/corrective order

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