Illinois filed an order in Cook County Circuit Court last month to discontinue financially troubled Community Care Alliance of Illinois, a subsidiary of now-defunct Family Health Network.
Kevin Fry, former acting director of the Illinois Department of Insurance, "determined that it is in the best interests of the (insurance companies), their policyholders, claimants, creditors and the public that both FHN and CCAI be placed into rehabilitation," according to the state's complaint. The companies did not appeal.
The Department of Insurance and the insurance companies declined to comment. Sources close to not-for-profit CCAI, which offers Medicare Advantage, Medicare prescription drug coverage, and dual Medicare and Medicaid plans, said it has less than 10,000 members.
FHN and CCAI insurance policies, contracts and agreements of reinsurance will "remain in full force and effect pending a determination by the (insurance) director as to when, and upon what terms, cancellation or renewal is appropriate," the complaint states.
The companies were on the hook for about $5.6 million, records show. They owed the state $16.7 million in overpayments related to medical loss ratio, or premium dollars spent on improving healthcare quality, and corrections to risk adjustment factors, or reimbursements to Medicare Advantage plans based on members' health. However, the state also owed the company $11 million.
According to the insurance department's 2017 annual report, FHN had a net loss of $12.3 million and CCAI had a net loss of $553,139.
FHN is in a state supervised run-off of its business, the complaint states. It exited the Illinois Medicaid business in 2017 when the managed care program was relaunched with seven (now six) insurers, down from 12. FHN moved its 220,000 Medicaid members into other plans, including CountyCare Health Plan, a subsidiary of Cook County Health. Former FHN President and CEO James Kiamos, who now serves as CEO of CountyCare, said at the time that FHN would focus on growing its small Medicare Advantage business.
"Chicago Medicare insurer to fold" originally appeared in Crain's Chicago Business.
