- This week, Moda Health was removed from under the control of Oregon's Department of Consumer and Business Services.
- The carrier agreed to stay in business and generate $179 million by taking the steps the insurance regulators outlined in a consent order, the Portland Business Journal reported.
- DCBS issued an order of immediate supervision two weeks ago, which said Moda would enter immediate supervision because its financial condition was hazardous to its insureds.
Moda reported a loss of $90 million after the federal risk corridor program came up short with its financial protection because the carrier had calculated their rates assuming that it would receive the full amount of funds. Under this program, designed to protect insurers from financial loses during the first three years of the ACA, the federal government paid less than 13 cents on the dollar. Its capital and surplus was $21 million as of January.
The carrier also lost money in the individual market, in which it had enrolled about 95,000 as of last September, the Portland Business Journal reported.
The state of Oregon took over Moda and ordered it to suspend renewing or issuing new policies, making any changes in management, or any other actions that would affect its busines, according to the DCBS order. DCBS gave the carrier until Jan. 29 to submit a business plan that would demonstrate how it can be viable beyond this year-end .
“Since January 27, we have been working through the process of assuring DCBS of our ability to continue to service our individual customers in Oregon and Alaska,” Moda CEO Robert Gootee said in a prepared statement. “They have done an excellent job of quickly analyzing a difficult and rapidly changing set of circumstances."
Without the new Financial Plan of Action, which is confidential, Moda possibly could have gone into receivership, DCBS Director Patrick Allen told the Portland Business Journal.
The consent order requires Moda to follow several steps including:
- Provide coverage and service to its individual policyholders in Oregon and Alaska through Dec. 31.
- Establish a bank deposit for the benefit of Alaska policyholders.
- Sell a portion of money owed to MHP by the federal government.
- Provide additional, more frequent reporting to DCBS and the Alaska Division of Insurance.
- Sell a combination of assets, including some held by Moda and making all proceeds available to MHP. These transactions, several involving third parties, will bring new capital to MHP.
- Obtain DCBS approval before awarding executive salary increases or bonuses.
- Obtain surplus notes, which are debt instruments considered capital and surplus.