Grassley seeks answers for CoOportunity collapse

Sen. Chuck Grassley wants the Centers for Medicare and Medicaid Services - the federal agency responsible for implementing health care co-ops - to explain its role in the collapse of CoOportunity Health, which was taken over by state regulators in December.

'I am extremely concerned about the thousands of Iowans who are impacted by CoOportunity's failure, in particular CMS's role in the failure,” Grassley wrote in a letter to CMS Administrator Marilyn Tavenner.

Grassley noted in his letter that CoOportunity Health as well as Iowa Insurance Commissioner Nick Gerhart told CMS last summer the co-op would need additional funding to continue offering coverage.

'While CoOportunity was facing financial challenges, if CMS had informed it earlier that it would not receive additional funds it could have taken steps to potentially avoid failure,” he wrote. 'CMS's lack of openness appears to have played a significant part in CoOportunity's failure. It also raises questions about how CMS administered the co-op funding and its process for informing states about assistance decisions.”

CMS said in a statement that it plans to respond to Grassley's letter, adding that 'CoOportunity's last request for funding was greater than all the resources that CMS had available.”

'Overall, the total funding requests from co-ops in the fall 2014 exceeded the amount of funds available to make loan awards,” said Aaron Albright, director of media relations for CMS, in an email. 'Also, enrollments dramatically exceeded the company's estimates, resulting in a rapid and immediate negative financial situation.”

CoOportunity originally estimated it would have about 11,000 members in the first year in Iowa and Nebraska. It had about 110,000 members by the end of 2014, Albright said.

'Insurance companies need sufficient cash reserves to be able to operate and pay health claims,” he said. 'Since these are new businesses, the law provides for startup loans and long-term solvency funding while these insurance companies become stable businesses.”

CoOportunity Health was set up through federal funding under the Affordable Care Act and was licensed to do business in 2013. State regulators took control of the not-for-profit health insurance company at the end of December.

The company had too many members for its reserves and only had about $17.2 million in cash and assets on hand. That, compounded with the fact that it could not obtain additional funds from CMS, forced it into a tough financial spot.

In Grassley's letter, he asked a series of questions about how and when CMS decides to make loans to the country's 23 co-ops and for information given by the agency to CoOportunity on how much funding was available.

CoOportunity Health - one of two insurers to offer health plans on the marketplace - is no longer selling plans and the Insurance Division has advised members to switch carriers.

Coventry Health Care now is the only insurer selling plans on Iowa's marketplace.

The U.S. Department of Health and Human Services said on Wednesday that more than 34,000 Iowans have signed up for health insurance through healthcare.gov as of Friday. In the first month, about 86 percent of Iowa consumers who signed up were eligible for financial assistance.

Since the second open enrollment season began Nov. 15, about 6.8 million people nationwide have purchased a plan or were automatically re-enrolled in the federal marketplace. Open enrollment ends Feb. 15.