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CO-OP leaders fear feds may not be able to recoup loan money

"There's nothing to collect," one official says

Leaders from the National Alliance of State Health CO-OPs say it may be almost impossible for the Obama administration to get back the more than $1 billion in federal loans it gave to the consumer operated and oriented plans that have failed, according to the Wall Street Journal.

The remaining CO-OPs formed their alliance in October, with the intention of pushing for changes to the Affordable Care Act that would help them succeed. 

Thousands of doctors, hospitals and other providers have not yet been paid for the services they provided to members of the CO-OPs that failed, and the Obama administration has said it will resort to legal action, if needed, to recoup the federal loans, the WSJ reports. But Dr. Martin Hickey, CEO of the New Mexico CO-OP and chairman of the alliance, said recovery efforts will essentially be a waste of time.

"In terms of collections, no. There's nothing to collect," Hickey told the publication. "Will there be a little money left? Yeah, maybe."

The Centers for Medicare & Medicaid Services (CMS) says it is taking steps to correct the issue. Yet in January, some lawmakers at a hearing about CO-OP oversight criticized CMS' handling of the CO-OPs, even accusing the agency of encouraging the nonprofit insurers to engage in creative accounting practices.

The Obama administration said it would improve the CO-OP system by checking up on the remaining organizations with financial audits, WSJ says. This new plan will also involve distributing money from plans with healthier and younger enrollees to plans with sicker and older customers in an attempt to level the playing field.

But Hickey doesn't have much faith in this approach, telling the WSJ that the measures will end up being busywork and a "kind of game" that won't help stabilize the CO-OPs.

The Obama administration has said it will would hold a forum in March to hear from insurers, CO-OPs and others in the industry about their concerns, but some industry leaders feel the CO-OPs will fold without significant changes to the system, the article adds.

To learn more:
- check out the WSJ article

Related Articles:
Lawmakers slam oversight of failing CO-OPs
Struggling CO-OPs, small insurers form coalition to push for change
Politicians point fingers as more CO-OPs fail