Moda Health Furloughs Dozens Of Staff Amid Coronavirus Downturn
Portland-based Moda Health, which offers health and dental insurance and sells plans in Oregon, Washington and Alaska, has furloughed dozens of employees due to the coronavirus pandemic.
Jonathan Nicholas, the company’s spokesman, said the furloughs stemmed from a drop in claims in Oregon and Alaska starting in mid-April.
“Reduced access to health facilities across Oregon and Alaska continues to cause significant slowing in our claim volume and in calls to our customer service lines,” Nicholas said in a statement. “In response to the reduced workload, we have extended furloughs with benefits to a range of employees, mostly concentrated in those areas.”
He declined to say how many employees were affected but indicated that 95% of Moda’s staff is still working. With 1,400 employees, that would mean that about 70 people are no longer receiving paychecks. Nicholas said Moda is still providing health care benefits and that no one was laid off.
He said he expected they’ll be able to come back.
“As economic activity resumes across health care throughout the communities we serve, we anticipate most of our furloughed employees will have an opportunity to return to Moda,” Nicholas said. “Our current projections call for the full range of activity to gradually return to normal over the next few weeks.”
Nicholas declined to release details about what jobs were affected. Sources told The Lund Report that the furloughed workers extended beyond people dealing with claims. Departments with unchanged work loads were also affected, they said. Nicholas also did not release any details about a drop in revenue.
In mid-March, Oregon Gov. Kate Brown issued an executive order banning Oregon hospitals and other providers from performing elective or non-urgent procedures, which tend to be the most profitable for the industry. The ban has cost hospitals across the state tens of millions of dollars in lost business, prompting many to lay off staff and cut salaries. The ban was lifted on May 1 but providers are still only allowed to perform half their normal volume of non-urgent surgeries.
An order issued Tuesday by the Department of Consumer and Business Services, which oversees commercial insurers, requires insurers to give members a 60 days to pay past due premiums.
Moda holds a significant portion of the Oregon insurance market. It has nearly 200,000 members in the commercial, individual and small-group markets, as well as more than 33,000 Medicare members, plus more than 50,000 Medicaid members insured through the Moda coordinated care organization that covers Eastern Oregon.It also has 1 million dental policy holders in Oregon, Washington and Alaska.
Moda ended 2019 celebrating a financial turnaround that seemed unthinkable just a year earlier. The Portland insurer posted a $227 million net loss in 2018, while fighting state regulators’ bid to put the company under formal supervision for its members’ sake due to financial stress. Moda blamed its staggering losses on the cutoff by Congressional Republicans of the Affordable Care Act’s “risk corridor” payments, meant to reimburse insurers that suffered losses in the ACA’s early years by enrolling sicker patients.
But 2019 was a different story. With a $152 million cash injection from Delta Dental of California, which acquired a 49.5% ownership stake that closed early in the year, Moda finished 2019 with a $39 million profit, according to its financial filings. That represented by far the largest turnaround of Oregon’s seven large commercial insurers.
Its fortunes turned as Moda added new medical policy enrollees at a healthy clip. Enrollment rose by more than 7% in 2019, a growth rate only PacificSource could beat.
PacificSource, based in Springfield, has not furloughed any employees or laid anyone off, said Lee Dawson, the company’s spokesman. Neither has Kaiser Permanente or Kaiser Health Plans, said Michael Foley, Kaiser spokesman. A spokesman at Regence BlueCross Blue Shield said no employees there had been furloughed either. And at Providence, the administration has stopped hiring for non-patient positions and it's reduced its use of agency staff and overtime but it's not had furloughs or layoffs in Oregon.
The news about Moda emerged a week after the insurer won a huge victory in the U.S. Supreme Court. In an 8-1 ruling, justices said that Moda and three other insurers were owed so-called “risk corridor” payments from the federal government for taking the risk of offering plans under the Affordable Care Act. That ruling is worth $12 billion. Moda’s share is an estimated $250 million.
In response to the ruling, Moda’s president and CEO, Robert Gootee, said the company planned to use the money to replenish the company’s reserves, retire debt and continue growing. “While this will not fully compensate us for the damages we incurred, it will create new jobs and lasting opportunities for our employees,” Gootee said.
Elon Glucklich and Christian Wihtol contributed to this story.