The abrupt shutdown this month of Health Republic, the nonprofit health insurance cooperative offering New Yorkers a less expensive health insurance option, took another surprising twist for providers and policy holders this week when the state Department of Financial Services suddenly put a “hold” on processing Health Republic claims.
That move left health care providers across the state with hundreds of millions of dollars in unpaid claims and prompted some providers to tell patients they would no longer participate in the insolvent health insurance company’s network.
Health Republic subscribers in need of medical care and services — subscribers who have paid premiums for health insurance coverage through the end of November — found themselves caught up in a contract dispute between their providers and their insurance companies. And no one knows how it will be resolved.
New York’s Department of Financial Services announced on Sept. 25 it had ordered Health Republic, which it deemed insolvent, to cease writing new policies as of Dec. 31 and begin an orderly wind-down of its business affairs. A month later, state regulators said the shutdown had been moved up to Nov. 30 because the insurance company’s financial condition was worse than originally thought. Health Republic, established in 2013 under the Affordable Care Act, insures 215,000 New Yorkers — 44,000 in Suffolk County.
The “hold” on claims processing was reported by Newsday Thursday. Department of Financial Services spokesperson Matt Anderson told the newspaper the agency had ordered Magnacare — which processes all Health Republic claims — to put a “hold” on processing “most” claims for Health Republic “to conserve assets.” It was not clear which claims would still be processed. Anderson did not return multiple phone calls or an email on Friday.
Nevertheless, Health Republic’s customer service representatives and staffers at the DFS consumer “hotline” insisted Friday that Health Republic subscribers are fully insured through Nov. 30.
Asked whether processing claims has been put on hold, a Health Republic customer service representative named Samantha said Friday, “Absolutely not. That’s not true at all.” The state Department of Financial Services, which is “overseeing things,” she said, “has put a limit of $2 million per day [on the payment of claims] and that has created a backlog,” she said.
“You are still fully insured and these claims are going to be processed,” she said.
A call to the Department of Financial Services consumer “hotline” Friday elicited the same answers from the customer service rep who answered.
“Providers are required to provide covered services to subscribers of Health Republic. They are running normally until the 30th and should be paying claims,” said DFS customer representative Michael.
But Melissa Mansfield, a spokesperson for the Healthcare Association of New York, which represents more than 500 not-for-profit and public hospitals, nursing homes, home care agencies, and other healthcare organizations across the state, said Friday that Magnacare was informed by the state on Friday, Nov. 6 to stop processing Health Republic claims.
New York’s hospitals stand to lose more than $100 million.
“I’m sure we’re out a lot of money,” Peconic Bay Medical Center president and CEO Andrew Mitchell said. “It is an utter mess.” Mitchell said he was not yet able to quantify the local hospital’s potential losses for unpaid claims.
There have been local reports of health care providers asking patients to postpone non-emergency, nonessential care. Some have even told patients they are considered uninsured and would have to pay for services out-of-pocket.
Health Republic and state regulators say providers are not allowed to do that.
In a letter to subscribers, the insurance company cited “existing protections” should a Health Republic participating provider seek to collect amounts owed to the provider by Health Republic for services provided to a subscriber. The insurer asks subscribers to report the incident to the DFS consumer assistance unit at 1-800-342-3736.
But an insured patient’s legal rights in the event of a denial of care remain unclear.
Mitchell said PBMC is waiting for additional guidance from HANYS on Monday.
“The situation is very, very fluid,” he said Friday.
State Sen. Ken LaValle, a member of the senate’s insurance committee, predicts that whole “Health Republic mess” — a mess created by Obamacare, he says — is going to be “a very protracted affair” and will be “the first of many.”
Health Republic is “just the beginning,” LaValle said in an interview Friday. “Others in coming weeks and months are going to announce the same thing.”
LaValle said the health insurance co-ops “committed themselves to something that they couldn’t sustain.”
Now, the senator said, “what you have going on is, basically, a bankruptcy proceeding. You have people who, under contract, should be providing you care. They should be saying, ‘Whatever your copay is, that’s what it is and I will get reimbursed from the company.’ But the question in a bankruptcy is how much are you going to receive on a dollar,” LaValle said.
LaValle blasted Obamacare — and Gov. Andrew Cuomo for creating the state health exchange by executive order after the State Senate refused to legislate it.
“In New York we sacrificed a wonderful system, built over a number of years. We had a community rating system. We had a system where parents could keep their adult children on their policies up to age 25. We also protected patients with pre-existing conditions. We had well beyond what the feds and Obamacare required,” LaValle said.
“To jettison something that was working for something that was unproven — that’s why our house was not willing to set up an exchange,” he said.
The senate will conduct hearings to investigate what happened, LaValle said.
“This is, quite honestly, a bowl of spaghetti that’s congealed and you just have to unwind it.”
Meanwhile, patients are caught in the crossfire. “You’re dealing with people’s lives. I pray that no one gets caught and loses their life because of this silliness,” he said. “It’s a mess.”
If you are a Health Republic subscriber, we’d like to hear from you. Have you sought medical care since Nov. 9? Have you had a health care provider inform you that you’re no longer covered or asked you to postpone your visit until after you have new insurance? (Responses will be kept confidential upon request.)
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