In the wake of Washington, D.C.-based Risant Health’s acquisition of Danville, Pa.-based Geisinger Health, the organizations are requesting reduced capital requirements for Geisinger’s insurance business, according to a Jan. 16 filing with the Pennsylvania Insurance Department.
Risant is a nonprofit organization under Oakland, Calif.-based Kaiser Permanente. It shared plans to acquire Geisinger in 2023 and finalized the deal in 2024.
As part of the arrangement, the Pennsylvania insurance commissioner required Geisinger Health Plan to maintain risk-based capital of at least 350% and Geisinger Indemnity Insurance Co. and Geisinger Quality Options to maintain risk-based capital of at least 400% for five years after the acquisition. Domestic insurers would then have to maintain at least 350% until 2039. In the January filing, the organizations proposed a modification to instead require all three insurance entities to maintain a risk-based capital level of at least 300% for the first 15 years.
“Geisinger Health has infused substantial capital into GHP to ensure compliance with the order’s RBC conditions. Redirecting funds to satisfy these elevated RBC thresholds does not meaningfully mitigate risk,” the filing said. “Instead, it limits Geisinger Health’s capacity, as an integrated system, to invest in and support underserved rural communities in Central and Northeast Pennsylvania.”
Geisinger and Risant said underfunded Medicaid is putting pressure on Geisinger’s investments in rural communities. Some of these investments include expansions for Geisinger Medical Center and Geisinger Wyoming Valley Medical Center, totaling $1.78 billion. As work requirements and more frequent eligibility checks come into play, Geisinger Health Plan also risks losing up to 38,000 Medicaid members and would mostly retain higher-acuity ones.
Geisinger CEO Terry Gilliland, MD, said the revision would free up $100 million, according to The Philadelphia Inquirer. Additional funds could be routed toward “high-quality, patient-centered care,” including preventive services, telehealth and care coordination for chronic conditions, the filing added.
