Thousands of individuals and two of Portland’s most beloved companies may be owed rebates that insurance company Zoom Health Plan sought to pocket for itself, if allegations being investigated by the Federal Bureau of Investigation are proven true.
That’s because of the Affordable Care Act requirement that health insurers that spend too little on care must send funds back to their customers.
“Under the ACA health insurers in the individual and small group markets are required to spend 80 percent of premiums on claims or health system improvements. In the large group market the requirement is 85 percent,” state Department of Business and Consumer Services spokesman Jake Sunderland told The Lund Report in an email. “Companies that fail to meet this requirement must rebate the difference to members.”
At the end of last year, Zoom Health Plan reported having 2,750 members enrolled in its plans.
In its 2016 full-year financial report to state and federal regulators, Zoom Health Plan said it spent more on hospital and medical expenses than it collected in claims. But the state Department of Business and Consumer Services, which includes the Oregon Insurance Division, has placed Zoom Health in receivership and sued sister company Zoom Management Inc., alleging “materially misleading and inaccurate” financial statements.
A former employee familiar of Zoom Health Plan told The Lund Report that the insurer’s medical loss ratio was close to 30 percent – which would trigger a mandatory rebate to individual and group health plans. As previously reported by The Lund Report, federal investigators served at least one subpoena on Zoom Health last week.
Sunderland declined to comment on this aspect of the Zoom investigation, but DCBS has previously confirmed the existence of a federal investigation and the state’s cooperation with federal investigators digging into Zoom Health Plan.
New Seasons, the organic-food-focused supermarket chain, and Hotlips Pizza are among the most prominent Portland employers to have signed on to offer Zoom Health plans to their employees.
According to the former Zoom Health Plan employee, New Seasons officials were concerned about the rebate, even asking the plan’s CEO, Dave Sanders, to explain himself to the supermarket’s board.
“New Seasons asked Dave to visit during the board meeting to talk about how much of the premium is coming back to him,” the source said. “That caught him off guard”
New Seasons did not respond to a request for comment by The Lund Report’s deadline. Hotlips Pizza, another prominent Zoom Health customer, also did not respond to a request for comment.
According to the former employee, Sanders directed workers to hide reimbursement information from government officials, patients, and even many employees of the health plan and its sister company Zoom Management Inc. The goal of this secrecy was allegedly to avoid large payments required of health plans sold on Affordable Care Act exchanges that spend less than 80 percent of premium dollars on medical care.
Not only was the Zoom Health medical loss ratio, or MLR, close to about 30 percent, according to the former employee – the New Seasons plan’s medical loss ratio was even lower.
"The New Seasons MLR was under 30 percent - they were at 26, 27 percent, in that ball park,” the source said. “That's why they asked Dave sanders to go to the board meeting. they wanted their money back and they wanted an estimate from Dave - how much are they getting back?”
As news of the investigation into Zoom Health Plan has spread, individuals who purchased the company’s insurance have also been asking online questions about rebates.
Regardless of the outcome of the investigation into Zoom Health Plan, it will likely be some time before individual or group buyers of the company’s insurance have answers about rebates.
“Rebates are issued for the prior year, meaning members would receive 2016 rebates in fall 2017,” Sunderland said.
Reach Courtney Sherwood at [email protected] or 503-208-4173.
