An embattled Albuquerque-based nonprofit health insurance cooperative that has been fighting questions about its solvency for more than a year announced in its second quarterly report this year that it's about down to its last million in capital.
New Mexico Health Connections reported in its quarterly statement for the period that ended June 30 that it had $1.2 million in capital remaining, down significantly from the $9.2 million the cooperative reported in its first quarterly statement for the period that ended March 31.
New Mexico Health Connections' recently filed quarterly financial statement reveals that, as of June 30, the insurer had only $1.2 million in capital remaining, down from $9.2 million at the end of March.
The cooperative also reported a net loss of $430,000 for the second quarter of this year and third and fourth quarter losses were expected to be even greater. With $1.2 million in remaining capital, the cooperative's risk-based capital is thought to be less than 30 percent, well below state requirements regulation take over when a company falls below the mandatory control level of 70 percent.
The cooperative also reportedly owed the federal government a $1.7 million Health Insurer Fee payment at the end of September, which didn't turn up on the Health Connection's amended 2017 annual filing. Health Connections also has accrued accrued $6.4 million in risk adjustment payments, most of it attributable to its 2017 business, and is about a $1 million less than what the cooperative will owe for that year.
Despite the quarterly report, Health Connections claims to be "on track to completely repay" about $13.1 million in startup loans that were converted to surplus notes in 2015
Should Health Connections be forced into liquidation, industry insiders say its members who received out-of-network care could find themselves on the hook for the entire cost of their care if the health cooperative's remaining funds can't cover all outstanding claims. Health care providers in the state also could be left with uncollectible debts as their contracts legally bar them from collecting amounts left unpaid by an insolvent insurer for an in-network patient.
Health Connections, a non-profit health plan offered in the state, prepared the statement in conformity as required by the state to determining its solvency, according to the financial portion of the statement. The statement includes the company's net income and capital and surplus, as prescribed under the National Association of Insurance Commissioners' Accounting Practices and Procedures Manual.
In September of last year, New Mexico Health Connections announced it would sell its commercial business line to longtime vendor Evolent Health to bolster its financial solvency. Health Connections said at the time that it would continue as a provider of Affordable Care Act insurance this year to it 18,000 members under the management services agreement reached with True Health, an Evolent wholly owned subsidiary.
New Mexico Health Connections' entire board of directors resigned almost a year ago in a move aimed at getting the state to take over what was then being described as "an insolvent organization."
In August, Health Connections filed suit in U.S. District Court of New Mexico against the U.S. Department of Health and the Centers for Medicare and Medicaid to block an emergency rule on risk adjustment program methodology for 2017. Health Connections claims the federal government owes millions of dollars under the Affordable Care Act.