Backlog of CoOportunity claims paid in Iowa, Nebraska

With the liquidation of CoOportunity Health underway, the Iowa and Nebraska Life and Health Insurance Guaranty Associations will start paying out a backlog of more than $80 million in outstanding claims to health care providers, the Iowa Insurance Division announced Friday.

'We're pleased that providers in Iowa and Nebraska will be paid for the health care services they provided to CoOportunity policyholders,” Insurance Commissioner Nick Gerhart said in a statement.

The associations will pay more than 5,800 providers for claims stemming from 2014, said Chance McElhaney, communications director for the Insurance Division. The associations will continue to pay providers' claims as they receive them. CoOportunity members can only keep their plans for up to 180 days from March 1 for individuals and 45 days for those in group plans. Providers then have until December to submit those claims for payment.

Iowa's guaranty association is made up of the state's health and life insurance companies. Those companies pay a required contribution to the association, which then uses those funds to pay the claims.

Wellmark Blue Cross and Blue Shield, a member of the association and Iowa's largest insurer, said it will not raise rates for its customers to pay for CoOportunity's claims.

'The Affordable Care Act, by nature of its Medical Loss Ratio requirement, prevents health insurance companies from using rates to make up for past losses – a practice Wellmark has followed even before the ACA,” said company spokeswoman Traci McBee.

The Affordable Care Act, by nature of its Medical Loss Ratio requirement, prevents health insurance companies from using rates to make up for past losses – a practice Wellmark has followed even before the ACA.

The Insurance Division began liquidating CoOportunity in February after it took over management of the not-for-profit health insurer at the end of December. CoOportunity was set up with $146 million in federal funds under the Affordable Care Act and was licensed to do business in 2013.

But the co-op found it had too many members for its reserves and not enough cash on hand. That, compounded by the fact that it could not obtain additional funds from the Centers for Medicare and Medicaid Services (CMS), forced CoOportunity into a tough financial spot.

CoOportunity had about 120,000 members in Iowa and Nebraska - far more than original projections - when state regulators took over in December. Court documents show that the company had an operating loss of more than $163 million in 2014 and an operating loss of $4 million at the end of January 2015.

CoOportunity reported cash and assets of $13 million at the end of 2014, with its liabilities exceeding its assets by $48 million.

More than 2,600 Iowans and 11,100 Nebraskans still had CoOportunity health plans as of Thursday, insurance division officials reported.

Those still enrolled with CoOportunity lost tax credit eligibility on March 1, as their plans no longer qualify under the Affordable Care Act. Policyholders who continue to pay premiums can still receive coverage of up to $500,000, but plans will be canceled on Aug. 31.

Small group plans will be canceled on April 15.

However, a special enrollment period exists for those still enrolled through April 29.

Coventry Health Care is now the only insurer selling plans eligible for subsidies on the state's marketplace, but Gerhart told an Iowa Senate panel in early February that he expects as many as three health insurance companies to join this year.

The Iowa Insurance Division is projecting that money recouped from the federal reinsurance, risk corridor and risk adjustment program on behalf of CoOportunity will be used to help pay back the Iowa and Nebraska Life and Health Insurance Guaranty Associations and other outstanding creditors, including agents and vendors.