Virginia: Optima Health embroiled in one ugly battle with the state Bureau of Insurance...
2018 MIDTERM ELECTION
Time: D H M S
Last year, Virginia residents experienced massive amounts of heartburn and ulcers as two major insurance carriers, Optima (Sentara Health) and Anthem (HealthKeepers) played musical chairs with both their 2018 rate filings and which areas of the state they offered plans on.
In May 2017, things didn't look too bad: Both Anthem and Optima were available in fairly large chunks of the state, and while Anthem wanted to raise rates an ugly 38% on average, Optima was only looking to increase rates by around 10-11%.
Unfortunately, by August, the situation had changed dramatically--Congressional Republicans had introduced a half-dozen different ACA repeal/replace bills, while there were strong warning signs that Donald Trump was planning on pulling the plug on Cost Sharing Reduction (CSR) reimbursement payments to insurance carriers. This, combined with other types of uncertainty, resulted in Anthem deciding to pull up stakes and bail on the entire Commonwealth en masse. In response, other carriers resubmitted two 2018 filings: One assuming CSR funding would be cut off, one assuming it wouldn't be. Optima was now asking for around 19% premium increases with CSRs or 32% without them.
By early September, it was clear that Trump would indeed be cutting off CSR funding. With just a few weeks left before the final deadline to sign 2018 ACA exchange contracts, Optima suddenly announced that they were not only jacking up rates a whopping 81%, they were also pulling out of a large chunk of the state, leaving large areas at risk of "going bare" without any ACA carriers whatsoever:
Optima Health is limiting its Individual plans offered on and off the 2018 ACA Exchange to locations where there are Sentara Healthcare hospitals and physicians. This will allow Optima Health to better manage chronic conditions to keep members healthy.
This move apparently means that the "bare county" problem--which was recently thought to be resolved with companies like Centene moving in to cover the last counties without any carriers participating--is back again: 63 of Virginia's 133 counties (technically 95 plus 38 "independent cities") are now facing no exchange carriers whatsoever. This will apparently leave around 70,000 current exchange enrollees without any carriers to switch to unless another carrier jumps in at the last minute.
In addition, there will be a premium increase. For any 2017 ACA covered participant qualifying for a subsidy, their 2018 increase will be 1.5% or an average of $4 per month. This means 70% of Optima Health Individual plan members will have their increases mostly absorbed by the government. For the remaining 30% of Optima Health Individual plan members, there will be an average 81.8% increase to premiums.Approximately 20% of this increase is our originally planned rate increase, 23% accounts for the uncertainty of Cost Sharing Reductions (CSRs) not being funded and the remainder is caused by the withdrawal of the national carriers.
Then, on September 14, with just days to spare and thanks to what I assume were some pretty intense backroom deals being made, Anthem suddenly announced that they were back in the game after all:
Anthem Changes Course, Will Offer Obamacare Plans In 63 Virginia Counties And Cities
Anthem said it has revised its plan to offer individual health insurance in Virginia after “learning that 63 counties and cities” would be bare and have no access to coverage in 2018 under the Affordable Care Act.
It’s welcome news to Virginia residents but also a good move for Anthem, the nation's second-larges health insurer, which appears to be maintaining individual coverage in areas of the country where it will have a monopoly. Anthem has been scaling back in some of the 14 states where it operates under the Blue Cross and Blue Shield brand, but remaining in areas that are in jeopardy of not having an Obamacare choice for 2018.
Unfortunately, part of that deal appeared to include a whopping 56% rate increase for Anthem HealthKeepers, a large chunk of which was to cancel out the lost CSR reimbursement payments. Optima, meanwhile, was still raising rates 82% on the areas they were still available in...which included the Charlottesville area, where they were the only game in town. In the end, the two carriers were approved at around those levels for 2018.
That brings me to this year. Virginia was once again the first state to post preliminary rate changes for 2019, and both Anthem and Optima had a very different request: A mere 5.6% increase for Anthem and a 2% drop in average premiums for Optima.
Unfortunately, that 2% drop doesn't do much good for Charlottesville enrollees, who are paying an unacceptable (and unaffordable) $3,000 per month for a family of four this year for high-deductible policies. In response, a citizens group formed called Charlottesville Healthcare, which successfully lobbied to get a new law passed which I've labelled the #TinyGroup law. It basically allows self-employed individuals to enroll in Virginia's small group market instead. It's a troubling and far-from-ideal workaround to the problem, as C'ville Healthcare readily admits, but it's the best temporary relief that they've been able to come up with so far.
However, they're also extremely upset with Optima/Sentara over the massive rate increases last fall which put them in this situation in the first place, and have been crying foul for months now, hoping to dig into the company's finances and records to find out whether those crazy-high increases really were actuarially justified or not.
Meanwhile, a few weeks ago, Anthem made another big announcement: They've decided to expand into more parts of Virginia next year...including the Charlottesville region. Anthem lowered their average 2019 premium increase slightly (from 5.6% down to 4.9%)...but Optima didn't budge at that time.
A week or so later there were some further tweaks among some carriers in response to ACA Medicaid expansion being officially launched in Virginia...including Optima, which was now asking for a 7.2% rate reduction. And finally, a few days ago, Anthem lowered their rates further still, now asking for a mere 2.5% increase.
HOWEVER, behind the scenes, there's been a LOT of legal activity as the Charlottesville citizen group continues to track down the Optima/Sentara records, and as Optima has tried to justify their actions. All of this culminated in the following case documents being filed (h/t to @cvillehlthcare).
Here's a summary of Optima's original petition for a declaratory judgment:
Optima Health Plan ("Optima"), by counsel, pursuant to Rules 100(B) and (C) of the Rules of Practice and Procedure of the State Corporation Commission ("Commission")1, hereby files this petition ("Petition") for:
(a) a declaratory judgment affirming Optima's right to submit rate revisions to its 2019 Rate Filing and to have its previously submitted rate revisions considered by the Bureau of Insurance ("BOI"); and
(b) an order directing the BOI to promptly consider such filing as soon as possible and in accordance with the federal deadlines pertaining to the Federally-Facilitated Marketplace ("FFM") developed by the Centers for Medicare and Medicaid Services ("CMS").
As time is of the essence, Optima further requests that the Commission establish an expedited schedule for the disposition of this Petition, including setting a hearing at the earliest day possible to ensure compliance with federal deadlines. Once certification agreements are executed by insurance carriers and CMS, the certification process will be complete for the 2019 Plan Year and Optima will be premium relief it is seeking to consumers in the Virginia individual marketplace. Accordingly, in the absence of the Commission's consideration of Optima's Petition on an expedited basis, the BOI's arbitrary imposition of the August 10 date and rejection of Optima's revisions to its 2019 Rate Filing will negatively impact tens of thousands of Virginia consumers.
Optima's Petition is essentially an effort to circumvent a process put in place by the Bureau - and applied consistently to all carriers interested in providing health insurance coverage to Virginia consumers in the individual and small group markets - to ensure the orderly submission and review of health insurance rate filings in advance of a related deadline imposed by the federal government. The Bureau believes its process will foster long-term stability in Virginia's insurance market and promote competition for the benefit of all its citizens.
The Bureau established its 2019 rate filing process, which includes several filing deadlines, partly in response to problems that arose during the 2018 rate filing process. Last year, in advance of the same federal deadline at issue here, the Bureau did not establish its own filing deadlines for requesting service area (i.e., geographic market) changes or premium rate revisions. As a result, carriers exited certain service areas in Virginia with no notice to the Bureau, leaving consumers in these localities at risk of having no health insurance options on the federally-facilitated health insurance market. This drove up rates in many localities and left the Bureau little time to review and approve the filings or revisions of other carriers that remained or ultimately entered these areas before the federal deadline.
The Bureau's 2019 rate filing deadlines allowed it to identify - well in advance of the federal deadline - which carriers had agreed to provide health insurance for specific service areas, and gave it time to adequately review the rates proposed by those carriers. The deadlines were communicated to all potential carriers, providing every carrier an equal opportunity to seek clarification from the Bureau, if needed, and to submit its best-and-final proposal for Bureau review. Though afforded the same opportunities as every other carrier, Optima instead seeks to undermine the Bureau's process, ignore its deadlines, and demand, after the fact, that the Bureau accept and review its untimely filing just days before the related federal deadline (and only after reviewing a primary competitor's rates).
Accordingly, the Bureau asks that the Commission deny the Petition and uphold the Bureau's decision to follow a fair process that it specifically created to facilitate the long-term stability and competitiveness of the insurance market in Virginia.
The real eyebrow-raiser comes a few pages later, however:
B. Prior to the August 10 deadline, Optima had ample opportunity to file a revised filing incorporating any changes reflected in its untimely Second Revised Filing.
Optima's Second Revised Filing was submitted after the August 10 deadline not because the Company was prevented from making the same changes earlier, but because it was previously unwilling to do so. The reality is: Optima was unwilling to offer better rates, as reflected in its Second Revised Filing, until after HealthKeepers came forward on August 10 with a more competitive bid, a fact that the Petition fails to mention.14
At any point in time before the August 10 deadline, Optima could have offered the same statewide rate reductions submitted on August 16, 2018. However, though aware from its August 2, 2018 discussion with the Bureau (as well as its own financial knowledge) that it had the ability to do so, Optima did not submit a filing that included lower rates based on profit margin decreases. Optima's First Revised Filing on August 9, 2018 contained nothing to this effect. It was not until after August 10, 2018, when HealthKeepers proposed lower, more competitive rates in many of the Service areas where Optima competed, that Optima was even willing to entertain the idea in its Second Revised Filing, nearly one week later.
This belies the Petition's complaint that the Bureau simply "decided not to allow" the Second Revised Filing. Quite the opposite, Optima had multiple opportunities to make the very changes reflected in its Second Revised Filing. The Bureau, therefore, did not act unreasonably by refusing to allow Optima to ignore existing deadlines and, instead, to incorporate those changes into its Second Revised Filing only after HealthKeepers' filing and only when it served Optima's own interests to do so.