State to wind up operations of federally funded Kentucky Health Cooperative, says it will not assume liability for losses

By Melissa Patrick
Kentucky Health News

The Kentucky Department of Insurance is taking control of the day-to-day operations of the failed Kentucky Health Cooperative, but will not assume any of its liabilities, according to a state news release.

Franklin Circuit Judge Phillip Shepherd signed the order Thursday to place the co-op into rehabilitation, and makes Insurance Commissioner Sharon P. Clark the rehabilitator. The order also appointed Jeff Gaither and David Hurt, both on contract with the department, as special deputy rehabilitators, department spokeswoman Ronda Sloan said in an e-mail. Glen Jennings has said that he will continue to serve as the acting Kentucky Health Cooperative CEO through Nov. 8, when his contract expires, according to Sloan.

Clark said in the release, “Today’s action placing KYHC into formal rehabilitation was necessary to ensure DOI is in a position to protect consumers and providers. Our central concerns are making certain policyholders receive the services to which they are entitled, and that the providers offering those services honor existing contracts and receive payment.”

The co-op announced in early October that it would be closing, but would meet its obligations to its members through Dec. 31.  Co-op members must apply for coverage with a different insurance company by Dec. 15 to have coverage on Jan. 1. Open enrollment runs between Nov. 1 and Jan. 31.

Two insurers, Anthem and UnitedHealthcare, will offer plans in all 120 Kentucky counties. Some counties will have up to seven choices, with expanded provider networks offering 86 different plans.
Kentucky Health Cooperative lost $50.4 million last year, but had only lost $4 million by the end of June, and said it fully expected to overcome its losses, through payments the federal government makes to companies for insuring sicker populations. But last year’s federal budget deal limited those “risk corridor” payments and destroyed that hope. The co-op was hoping to get $77 million in risk-corridor money and got $ 9.7 million. 

Cooperative policyholders and providers with complaints or other issues related to the rehabilitation action should call the Insurance Department at 800-595-6053.

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