The latest news about Moda’s failure to negotiate a contract with Providence Health & Services has onlookers speculating that the health plan could be on the chopping block – ripe for a takeover. Moda has relied on Providence’s 700 physicians and four hospitals in the Portland metropolitan area. Now its members will have to pay more money out of pocket – known in the industry as out-of-network fees -- to access those providers.
Who might be interested in Moda Health?
Confidential sources told The Lund Report that Legacy Health and PacificSource Health Plans – which recently announced their own joint merger – have their eyes on Moda and met with its high ranking executives to discuss such an option -- with that meeting happening behind closed doors.
But Jonathan Nicholas, vice president of strategic communications at Moda, denied such a meeting took place. He also insisted that Moda has no intention of asking Oregon Health & Science University for another loan after the federal government refused to bail out Moda by repaying $90 million in losses related to the Affordable Care Act. Earlier, OHSU loaned Moda $50 million – the largest loan in its history. Following OHSU's board decision, its president, Dr. Joe Robertson, stepped down from Moda’s board of directors.
Nicholas also told The Lund Report that Moda still has a “strong business relationship with Providence. Our mutual decision to focus our networks is limited to the Individual insurance market in Portland. Our decision to focus Portland metro-area access in the Individual market reflects an industry trend toward narrower networks in order to better coordinate care within these systems and to better manage healthcare costs. In the case of Providence, our Individual customers can now elect to access Providence providers through our Rose City network at Healthcare.gov.”
OHSU also has a close affiliation with Moda as part of its Synergy Network, which includes nine hospitals from Salem to Bend. And, the 20,000 employees and their families at OHSU have Moda coverage.
But Moda finds itself in a quandary, still needing to rely on Legacy Health and Adventist Health for the bulk of its hospital care and physician networks. Yet one more reason why Legacy might be interested in merger talks with the insurer.
Moda’s lucrative contracts with the state’s public employees (Public Employees’ Benefit Board and its teachers (Oregon Educators Benefit Board) are immune from the failed negotiations with Providence, Kathy Loretz, deputy administrator of PEBB, told The Lund Report. .
In fact, Moda has a stronghold on these two markets – which give it a lucrative advantage in the event of a merger.
Moda’s captured 69.6 percent of all OEBB members – 42,193 teachers – having held this contract since 2008, with Kaiser its only competitor. And, it has 1,093 public employees under its belt from PEBB where it competes with Providence and Kaiser which have substantially more members.
Individual market
Moda dominated the individual market, pulling in more than 100,000 members last year after lowballing its premium rates. Now after raising its rates by 25 percent and with the loss of its Providence contract, Moda could lose a substantial number of members in the next three months with open enrollment underway.
People who had already signed up with Moda before the announcement about the failed Providence contract was known can switch insurers. They have until Jan. 31 to do so, according to Jake Sutherland, public information officer for the Oregon Insurance Division.
Moda is also struggling with its $79 million loss from the federal risk corridor program after only receiving $11 million of the nearly $90 million it was anticipating to cover costs related to the Affordable Care Act. And. It’s announced plans to pull out of California and Washington.
Diane can be reached at [email protected]
ANNOUNCEMENT BY MODA
Moda Health Plan announced today that it has received a $50 million capital investment from its parent company, Moda, Inc. The investment is in addition to a $50
million investment made in the health plan in 2014 by Oregon Health & Science University. This insures that Moda Health Plan’s capital continues to exceed statutory requirements.
“This should finally put to rest recent speculation about the financial condition of our health plan,” said Robert Gootee, President and Chief Executive Officer of Moda, Inc.
CMS, the federal government agency implementing the Affordable Care Act, recently announced it was unable to pay the full amounts owed to insurance companies participating in the ACA market. In Moda’s Health’s case, the shortfall is estimated to be approximately $170 million for coverage provided in 2014 and 2015.
“While we were obviously surprised by the news from CMS,” Gootee said, “it was always our intention to replenish any capital shortfall in the health plan once we could accurately determine what level of capital was required. We have now done that.”
Gootee added that Moda “continues to work closely with CMS” and remains confident the federal government will honor its financial commitments to insurers who agreed to participate in the ACA.
“Despite problems with the risk corridor payments, the people at CMS have done a great job managing the difficult task of implementing the ACA and our confidence in their work underlies our ongoing commitment to healthcare reform,” Gootee said.
Moda Health Plan was one of the first insurers in Oregon to offer broad-based coverage under the ACA and, according to Dr. William Johnson, President of Moda Health Plan, remains fully committed to healthcare reform. “We anticipated that the three-year rollout for the ACA would be a work in progress,” Johnson said. “But no one anticipated the size of the risk corridor payment shortfall. That having been said, we have worked through it and are proud of our continuing role in expanding health care access to tens of thousands of people in our core markets of Oregon and Alaska. ”
Gootee also said that Moda Health Plan’s recent decision to exit the Washington health plan market and discontinue its exploratory entry into the California insurance market reflects a strategic decision by the health plan to focus its resources in its critical core markets. In addition to the 423,000 health plan members in Oregon and Alaska, Moda Inc. provides dental coverage to more than 1 million members in these states through Delta Dental Plan of Oregon, another in the Moda group of companies.
“The combined strength of the health plan and our dental insurance business gives us a significant competitive advantage in Oregon and Alaska that we don’t presently have in other markets,” Gootee said. “The intent of our recent strategic decisions affords us the opportunity to build on that competitive advantage in core markets while we wait for the complete implementation of the ACA in 2017.”
