Community Health Options’ efforts to keep a lid on membership is starting to pinch its income from premiums, and paid claims are running higher than expected.

The health insurance cooperative, based in Lewiston, told state regulators that total membership was 2 percent lower in March than had been projected and that meant a reduction in premiums of $4.3 million.

But the nonprofit insurer, which has more than 80,000 members in Maine and New Hampshire, also said March expenses were lower than expected and cash investments were up over the amount reported at the end of 2015.

Community Health Options reported a $31 million loss in 2015 after being the only cooperative created under the Affordable Care Act to report a profit in 2014. The loss meant that CHO was put under “enhanced oversight” by the Maine Bureau of Insurance, requiring it to report on its finances monthly.

The reports have generally found that the company is following its plan and finances are stabilizing.

Its losses were largely the result of rapid growth, particularly among people who were getting health insurance for the first time. In many cases, those cooperative members ran up big medical bills because they took care of health problems that they had put off while they were uninsured.

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In addition,Community Health Options raised its rates only minimally last year, based on 2014’s profits. Rate proposals are filed with state regulators in the first half of the year, but then take effect on Jan. 1 of the following year.

Eric Cioppa, the state’s insurance superintendent, said the lower premium income is expected to stabilize in future months because most of the cooperative’s policies went into effect on Jan. 1. And, he said, expenses – usually payments to health care vendors – were higher than planned for the first two months of the year, but lower in March and should be lower for the rest of the year as efforts to negotiate lower reimbursements bear fruit.

Cioppa said he also met last month with officials with the Centers for Medicare and Medicaid Services about how and whether CHO will re-enter the insurance marketplace at the end of the year to sign up new members.

Cioppa clashed earlier this year with CMS when he sought to put Community Health Options into receivership and terminate thousands of policies as a way to cut the cooperative’s losses. CHO had agreed to the approach, Cioppa said.

But federal regulators rejected that approach because a key provision of the ACA is a guarantee that policies will be renewed. Cioppa said that decision tied his hands on dealing with CHO’s 2015 losses, despite the fact that dropped policyholders could have been picked up by the other two insurers in Maine’s exchange.

But Cioppa said his discussions with CMS officials last month were positive and productive.

The Bureau of Insurance ordered Community Health Options to stop selling policies as losses grew last fall, but because of delays in how that order was implemented through CMS, it didn’t take effect until late December. By that time, CHO’s membership had already grown sharply.

Cioppa said the cooperative will file its rate proposal for 2017 next week and issue a quarterly financial report by mid-May.

 


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