ACA Risk Adjustment Leads Northwell to Shutter Insurance Plan
Northwell Health cited financial instability associated with the ACA’s risk adjustment pool as the top reason to halt insurance plan operations.
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By - Northwell Health will end the sale of its CareConnect health plans in New York after hefty risk adjustment payments resulted in financial losses for the program, the health system announced.
ACA risk adjustment payments totaling $112 million from 2016 CareConnect small group health plans (businesses with under 100 employees) have forced the health system to cease operations in New York state. Its 2016 payments totalled 44 percent of CareConnect’s revenues.
Based on the losses in 2016 and operations in 2017, Northwell Health predicted risk-adjustment payments to also total over $100 million in 2018.
Leaders at Northwell Health attributed profitability issues to some of the burdensome regulations of the ACA. Current policymakers have been unable to amend these regulations, the health system said, and payments towards the risk-adjustment pools under federal law have become untenable for the organization.
“It has become increasingly clear that continuing the CareConnect health plan is financially unsustainable, given the failure of the federal government and Congress to correct regulatory flaws that have destabilized insurance markets and their refusal to honor promises of additional funding,” said Michael J. Dowling, Northwell Health President and CEO.
“However, the continuing uncertainty in Washington about the future of the ACA, intractable regulatory problems and the federal government’s broken promise of so-called `risk-corridor’ payments to insurers provide us with no viable path to profitability in the foreseeable future.”
Northwell will continue operation of the health plan until 2018 to give many consumers enough time to find new insurance offers and providers.
The change will not affect Northwell’s commitment to value-based care, stressed Dowling. Currently, the system is serving about 400,000 patients under value-based arrangements, including 125,000 who are receiving coverage through CareConnect.
“I greatly appreciate the positive steps taken by the New York State Department of Financial Services (DFS) earlier this year to reduce the financial impact of the risk-adjustment program on CareConnect and other small insurers writing individual and small-group health policies,” said Dowling.
“As much as we regret having to make this decision to withdraw from the market, I continue to believe in the strategy of CareConnect, population health and the benefits that come from value-based care.”
“CareConnect has delivered on its promise to offer consumers affordable access to excellent care,” Dowling said. “I am proud of what we have built and the value we bring to individuals and businesses.”
As payers continue to evaluate regulatory and profitability challenges, Northwell Health remains committed to using innovative new solutions and care models to improve all levels of healthcare.
“The market challenges confronting us require that we continue to be bold in our thinking,” Dowling said. “Moving forward on our population health journey, we will continue to explore new models of care delivery that will help us accomplish the triple aim of improving the patient experience and the health of our communities, and reducing the per capita cost of care.”
