Oregon Health CO-OP Accepts Cali’s Decision

At the same time, the CO-OP’s leader urged the insurance commissioner to collaborate over the coming year to improve the rate filing and approval process.

This article has been corrected to reflect the fact that the Oregon Health CO-OP isn't the first insurance company to offer naturopathic benefits but the CO-OP is the only health plan in the country to certify naturopathic physicians as primary care providers. 

After realizing that he had no choice but to surrender to the decision by Laura Cali, the state’s insurance commissioner, CEO Ralph Prows accepted the 9.9 percent rate decrease for the Oregon Health CO-OP on Monday morning – the deadline set by the commissioner. Earlier, Prows had requested a 21 percent decrease.

Had he not agreed, the CO-OP would have been unable to offer individual health plans either off or on the health insurance exchange next year – despite the commissioner’s offer that he could request an evidentiary hearing.

Prows declined that offer after realizing such a hearing could take weeks if not months to schedule and wouldn’t have occurred prior to September when the new rates must be finalized.

“The legal options that were presented to us were a false option,” he said. “Those hearings take many months to organize conduct and conclude.”

In his letter to Cali, Prows encouraged the commissioner and her staff to meet with him during the coming months to discuss the rate fling and approval process to avert similar problems next year, and “guarantee the consumer a better result for 2016 and beyond.”  

Last Friday, Prows and his team of actuaries from Milliman heard the Insurance Division’s reasoning behind its decision – but were not given an opportunity to dialogue.

“Our actuaries are disappointed and quite puzzled that their calculations and source documentation, using the best actuarial science, were not fully understood by the Insurance Division,” according to Prows.

He insisted the CO-OP would be very competitive in the coming year. “Our policies reflect what people say they want, and we’ve gotten rid of all the gotchas – coinsurance and deductibles.” The only out-of-pocket cost are copays, and people will know exactly that fee beforehand, and never get another bill from a hospital or a doctor, he said. The CO-OP also offers acupuncture as a covered benefit, and Prows said his was the first insurance plan in the country to bring naturopaths on board. However, that fact is untrue. In 1982, the  Consumers United Group issued a policy put together by Jeffrey Lang, executive vice president of Gales Creek Insurance Services, a division of JD Fulwiler, that covered naturopaths as long as the company held a state license. Since then, according to Lang, a few other insurers have followed his lead and have had mixed results.

However, the CO-OP is the first health plan in the country to certify naturopathic physicians as primary care providers, according to Prows. They can provide the same services as allopathic primary care physicians without limits on the benefits or a designation as alternative care.

"Other health plans categorize services from naturopathic physicians as alternative care or naturopathic benefits, and often limit the benefit," Prows added. "There is a huge and distinct difference. Oregon's Health CO-OP mainstreams naturopathic physician care, whereas other health plans categorize them separately and limits their services under alternative benefits.

“We listened and actualized what Oregonians wanted, that distinguishes us from other health plans,” Prows added. In November, the CO-OP also intends to hold board elections among its members who’ll occupy seven of the 13 seats.

Based on Cali's final decision, the CO-OP will offer a silver standard plan for $230 a month to a 40-year-old, instead of the requested $179. The CO-OP has about 2,000 members in the individual and small business market after launching operations a year ago.

LifeWise Health Plan of Oregon will offer the lowest rates in the individual marketplace next year -- $222 a month for a 40-year-old, while Moda Health, which had been the lowest up until now is charging $245..

The lower rate requested by the CO-OP had the support of the independent actuarial firm of Milliman, which has spent the past nine months ratcheting down every percentage point of savings, and even looked at the potential morbidity of his individual members along with their medical costs, which was a point of contention by Cali.

In an earlier article, Prows told The Lund Report, “We agree that solvency is crucial and ran our numbers out for the next 30 years and know what we’re doing. I’m an expert when it comes to medical management. I don’t understand how the Insurance Division could tell us we were wrong. It’s as if Laura Cali is trying to interfere with the free marketplace.”

The Centers for Medicare and Medicaid Services also takes a very close look at the CO-OP’s operations, having loaned the CO-OP $56 million to get off the ground. Earlier this year Prows submitted details about his business performance to the federal agency, “and they haven’t expressed any concern.”

The Insurance Division thought the individual population should be assessed as sicker than the small group population, Prows said. But Milliman disagreed, along with findings from the 97-page Wakely Report, commissioned by the Insurance Division for $175,000.

“Both reports support our position,” Prows said. “We’ve been working with the best actuaries in the country to come up with this rate reduction. Now the Insurance Division wants to increase our rates, and it makes absolutely no sense to us.  We’ve looked at the science of this and are resolved to push back with everything we have.”

The CO-OP was also asked by the Division to reduce its medical-loss ratio by 2.6 percent in 2015, the amount of money spent on medical care. But such a position is contrary to state and federal law because the CO-OP would only be spending 77 percent of its premium dollars on medical care rather than 80 percent, and be forced to charge higher premiums which would reduce enrollment and have to rebate that 2.6 percent dollar figure back to its policyholders.

“Obviously that wouldn’t help consumers,” said Prows, who can’t understand why the Insurance Division would want the CO-OP to violate state and federal law.”

The CO-OP is not investing money in a sports arena, paying exorbitant executive salaries or engaging in new business start-ups, Prows contended. “We’re determined to find every way possible to deliver an affordable product to Oregonians, and won’t stand idly by and allow someone to tell us we need to increase our rates by 14 percent. There’s absolutely no sound reason, and we’re going to prove it.”

Diane can be reached at [email protected].

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