39K people told to get new coverage as North Carolina puts Friday Health Plans into receivership

The death spiral for Friday Health Plans continues, as insurance officials in North Carolina placed the troubled insurer into receivership and told the company’s approximately 39,000 members in that state in a press release to start shopping for another health plan as soon as possible.

Jayson Tyson, a spokesperson for the North Carolina Department of Insurance, told Fierce Healthcare that the state moved forward “judiciously and at a deliberate pace” in taking its action to establish a system whereby Friday’s policyholders will not have a gap in coverage.

“We’re going to continue to try to protect the policyholders,” Tyson said. “We want to give them enough time to find other coverage.” Friday sells health plans on the Affordable Care Act marketplace.

Meanwhile, the Eighth Judicial District Court of Nevada today made receivership official for Friday Health Plans of Nevada, according to a press release from the Nevada Division of Insurance. The Nevada court appointed Nevada Insurance Commissioner Scott Kipper as receiver. State officials initiated the petition for receivership on June 1, with the company’s consent, because of concerns about Friday Health Plans of Nevada’s financial condition.

Kipper now takes over the day-to-day operations of Friday’s Nevada plans, and he intends to “thoroughly examine its finances in order to determine the best option to protect policyholders and creditors—either by rehabilitating and returning the company to private management or by liquidating the company,” according to the press release. In addition, the Nevada court ordered an injunction against providers saying that they cannot deny providing care to the 2,805 Friday policyholders in the state.

North Carolina is just the latest state to place Friday Health Plans into receivership. Texas, Georgia, Oklahoma, and Nevada did so as well, although they went about it in slightly different ways, according to Ari Gottlieb, principal at A2 Strategy Group and a nationally known healthcare strategist who’s kept a close watch on the insurtech industry.

“Nevada hasn’t told members that they have to find a new plan, as of yet,” Gottlieb told Fierce Healthcare. “Colorado has suspended enrollment and is actively managing the situation but has not yet put it into receivership.”

Tyson said that North Carolina moved slower than other states because of the unique situation regarding Friday because it didn’t appear that Friday struggled financially as much in that state.

“It may look like we were slow, or maybe took our time with all these actions, but our team was very tactical,” Tyson said. “We looked at the analysis of their books, we looked at what they were holding here in North Carolina. They were probably a little healthier here than they were elsewhere.”

Nonetheless, North Carolina’s insurance officials kept a close eye on what went on in other states, Tyson said, noting that the National Association of Insurance Commissioners comprises insurance officials from all states.

“That’s a really great network of communication there,” Tyson said. “We were very aware of what’s going on in Georgia, what’s going on in Colorado, and what took place in places like Oklahoma, and in Texas with Friday Health Plans. We’re not an island here.”

To avoid a gap in coverage, Friday policyholders in North Carolina will need to find a new insurance plan on the ACA exchange by August 31. “Consumers that fail to choose a new plan by that date will still have until October 30 to obtain coverage but will have a gap in coverage from the date all FHP-NC plans are terminated on August 31 until the effective date of new coverage,” the press release said. “A website to assist impacted members with the process of choosing a new exchange health insurance plan will be established with a link on the North Carolina Department of Insurance website.”

Just how state insurance officials shut down Friday Health Plans could impact other health insurance companies operating in the states in which Friday has a foothold because Friday’s policyholders and unpaid bills may be passed on to them.

Gottlieb said that “given how the situation is playing out, Friday’s ability to continue to operate is becoming more challenged and may be contingent on Friday finding the capital to even wind down the business.”

Gottlieb’s assessment appears to be all too accurate. The Alamosa News in Colorado reports that the Denver-based Friday plans to lay off all of its employees in Alamosa between June 23 and July 6. The insurtech at one time employed about 300 people in Alamosa, according to the newspaper.  

In an email sent to Friday employees and that the Alamosa News said it obtained, Friday management wrote that the insurtech must renege on its promise to employees to give them at least 60 calendar days’ notice of layoffs after the company decided to wind down. The inability of the company to obtain additional capital made the winding down dependent on state regulators and that, according to Friday management, created “business circumstances that were not previously reasonably foreseeable and that FHP has now determined will result in affected employees receiving less than 60 calendar days’ notice prior to their employment separation dates,” according to the email.

Back in North Carolina, there’s also the issue of whether former Friday policyholders who find another healthcare plan on the ACA marketplace will be on the hook for having to pay two deductibles in one year. Some ACA plans can have deductibles as high as $7,000, although the average deductible seems to be about $1,400.

Tyson said that North Carolina’s insurance officials have been in contact with the Centers for Medicare and Medicaid Services “regarding any money paid toward deductibles and out-of-pocket expenses that were incurred by policyholders. We’re working with them to figure out the best solution. As soon as we come up with that, we will certainly be posting that information to our website and putting that information out there about how that will be handled.”