Moda Health continues to ratchet up financial woes. The latest news – a decision by the leading insurance rating and information source – A.M. Best to place the insurer “under review with negative implications” follows the announcement by the Centers for Medicare & Medicaid Services to not pay back Moda $70.3 million under its risk corridor program. Up until now, Oregon Dental Service, the parent company of Moda, had a financial rating of B++ (Good), including its other subsidiaries Dentists Benefits Insurance Company (DBIC) and Northwest Dentists Insurance Company.
According to A.M. Best, which is considered the world’s oldest and most authoritative insurance rating and information source, “The under review status for the Oregon Dental Service and its subsidiaries reflects the considerable capital strain that the potential write down of Moda Health’s risk corridors receivable will likely have on the organization. The company also has a receivable booked for the 2015 risk corridors program. In addition, Moda Health has reported net losses through the first half of 2015. Given these factors, A.M. Best has concerns regarding the 2016 pricing for these products, as well as maintenance of adequate risk-adjusted capital for the organization.
“The ratings of Oregon Dental Service and its subsidiaries will remain under review pending discussions with the company’s management regarding any adjustments to the risk corridors receivables, 2016 product pricing and risk- adjusted capital levels at the insurance companies.”
Moda, like other insurers, had its risk corridor payments prorated to 12.6 percent of submissions and swallowed a loss of $89.5 million in 2014, only ending up with $10.4 million from CMS. That was due, in part, to the high numbers of uninsured people who joined its ranks under the insurance exchange where it became the leading insurer in the individual market with more than 101,000 members, who here influenced by its low monthly premiums.
This time around, Moda is hiking its premiums considerably by 25.6 percent with the average individual rate increasing from $245 to $307 per month, and it no longer will offer the lowest rates..
There’s been rampant speculation that someone is going to bail out Moda Health – but no one is talking publicly. When asked for comment, Jake Sutherland, spokesman for the Insurance Division, told The Lund Report in a written statement, “We do not talk about the financial details of individual companies unless we are taking regulatory action. I promise that if there is any news that is public I will let you know.”
Meanwhile, Officials at Moda have contacted CMS for further clarification. “In the meantime, we’re hard at work working through this and will need the next few days to fully digest the information, to secure answers to the many questions we have, and to determine how all this may impact us moving forward,” Jonathan Nicholas, spokesman, said earlier, adding that Moda was surprised and disappointed by the decision from CMS.
Diane can be reached at [email protected].
