How New Mexico’s health insurance co-op has stayed in the game
By Marissa Higdon, Reporter, Albuquerque Business First, September 19, 2016
When the Affordable Care Act went into law in 2010, co-op health plans were born, and 24 received funding from the Centers for Medicare and Medicaid Services (CMS). One of those 24 never received a license, and now only six remain. Among those six is New Mexico Health Connections.
Dr. Martin Hickey, CEO of New Mexico Health Connections, says co-ops have been failing for a number of reasons. Co-ops, like all insurance providers, didn’t realize how many sick people there were when they first created, and priced, plans.
“There were more sick people than what people were pricing at,” Hickey said. “That haunted every health plan that participated in the exchange.”
Co-ops also suffered from CMS’ risk adjustment program, he said. Health Connections has filed a lawsuit against the federal government in hopes of changing the way the program is implemented.
The risk adjustment program is meant to help spread the wealth when it comes to insurance providers by taking money from plans that profited from healthy patients and giving it to plans that lost money on sicker patients. The idea is to make sure a certain provider doesn’t lose money just because the people it insures happen to be sicker, but Health Connections’ lawsuit alleges that the program is instead punishing the co-op for managing care well and keeping prices down. In 2014 NMHC paid $6.7 million into the risk adjustment fund.
Still, despite the challenges, Hickey says New Mexico’s co-op is doing well. In the lawsuit, the organization cautions that if the current risk adjustment system stays in effect it “could potentially force NMHC to close within the next few years,” but Hickey says the organization turned a profit last month and plans on continuing to do so throughout the year.
Hickey credits the co-op’s success to cost-saving measures. He says NMHC is the only co-op that, from the start, contracted directly with providers. A lot of co-ops used to contract with third parties to negotiate rates and figure out payments, which ended up costing them more.
He also says NMHC uses innovative medical management practices to take care of patients and limit hospital visits. The co-op has case managers who make sure patients are filling medications.
“The day after a refill is missed, we know about it,” Hickey said.
He says the organization’s focus on continued care, especially for individuals with chronic diseases and mental health concerns, has driven down the number of times patients have to visit the hospital, saving the co-op money.
Hickey says he just returned from a trip to the White House, where he shared Health Connections’ innovations and successes with fellow insurance providers and the president himself.
“There’s a glass half full here,” he said. “Despite some problems, you can save money and keep health plans on the exchange.”