Bright Health owes CMS $380M in risk adjustment payments

Bright Health owes CMS $380 million in risk adjustment payments from its shuttered insurance business, the company said Sept. 19. 

In regulatory filings, the company said its subsidiaries in Colorado, Florida, Illinois and Texas entered an 18-month repayment agreement with CMS for the risk adjustment payments, at an 11.5 percent annual interest rate. 

The company has already paid CMS $1.5 billion in risk adjustment payments, around 80 percent of what it owes for its shuttered ACA insurance business, according to the filings. The company said it has paid around 98 percent of what it owes in claims for its individual insurance business. 

In the ACA market, payers must pay in risk adjustment payments to CMS, designed to even out financial risk between payers with higher and lower-risk enrollees in each market.  

Ari Gottlieb, a consultant at his firm A2 Strategy Corp, told Becker's the payments could have some effect on other payers expecting to receive larger risk adjustment payments, especially in states where Friday Health Plans also exited the market, leaving its share of risk adjustments unpaid. 

"This is not the federal government's money. This is money that ultimately, other health plans were expecting," Mr. Gottlieb said. 

Bright Health said it would wind down all of its individual insurance, and all of its Medicare Advantage business outside of California, at the end of 2022. 

In June, Molina Healthcare said it intends to purchase Bright Health Group's California Medicare Advantage business, Bright's last insurance product, for $600 million. 

Mr. Gottlieb said Bright Health's future depends on the deal with Molina Healthcare going through for the full $600 million price. 

"It is my personal belief that Molina is going to pay less. It is very tenuous. Even if they get the full $600 million payout, [Bright] still has a billion dollars in debt. They're left with ACO REACH, and some providers in Florida and Texas, and all of the costs of being a public company with really high executive compensation," Mr. Gottlieb said. 

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