Bright Health Group Continues to Make Significant Progress Towards ACA Insurance Business Wind-Down
September 19 2023 - 6:45AM
Business Wire
- Medical claims runout is estimated to be over 98% complete and
continues to track with prior forecasts
- Completed payments to fully satisfy risk adjustment obligations
in seven states
- Enters into repayment agreements with CMS and four states to
fully satisfy all remaining risk adjustment obligations over the
next 18 months
Bright Health Group, Inc. (“Bright Health” or the “Company”)
(NYSE: BHG), the technology enabled, value-driven healthcare
company, today announced it continues to make progress on the
wind-down of its ACA insurance business.
The Company has made significant progress paying down its
medical claims obligations and is on track with prior forecasts. As
of the end of August, the Company believes that its claims runout
is over 98% complete.
Bright Health’s final risk adjustment obligations across its ACA
insurance business markets were consistent with expectations at
year-end 2022 and the end of the Second Quarter 2023. As of today,
Bright Health has paid $1.5 billion to the Centers for Medicare
& Medicaid Services (“CMS”), which represents 80% of its final
ACA insurance business risk adjustment obligations.
Bright Health also announced that its insurance subsidiaries in
Colorado, Florida, Illinois and Texas have entered into repayment
agreements for a principal amount of $380 million with CMS with
respect to the unpaid amount of the risk adjustment obligations.
The principal amount of the repayment agreements is due in 18
months and bears interest at 11.5%. Exclusive of its obligations
under the repayment agreements, Bright Health expects to have
approximately $105 million in excess cash surplus in Colorado,
Florida, Illinois and Texas, after reserving for expected medical
costs and other anticipated wind-down expenses. The Company further
expects to recover approximately $115 million in regulatory capital
surplus in its other markets, subject to final claims runout and
regulatory approval. Together, this results in an estimated net
risk adjustment obligation of $160 million, before interest costs,
after applying estimated excess cash reserves and regulatory
capital surplus against the outstanding principal amount under the
repayment agreements. The Company intends to use a portion of the
proceeds from the pending sale of its California Medicare Advantage
business to pay any remaining amounts due under the repayment
agreements.
Today’s update on the ACA insurance business wind-down follows
the announcement on August 7th of a $60 million credit facility
with New Enterprise Associates and permanent waiver of default on
the prior bank credit facility, which is expected to support the
capital needs of the Company through the pending close of the
California Medicare Advantage business sale.
About Bright Health Group
Bright Health Group is a technology enabled, value-driven
healthcare company that organizes and operates networks of
affiliate care providers to be successful at managing population
risk. We focus on serving aging and underserved consumers that have
unmet clinical needs through our Fully Aligned Care Model in
Florida, Texas and California, some of the largest markets in
healthcare where 26% of the U.S. aging population call home. We
believe everyone should have access to personal, affordable, and
high-quality healthcare. Our mission is to Make healthcare right.
Together. For more information, visit
www.brighthealthgroup.com.
Forward-Looking Statements
Statements made in this release that are not statements of
historical fact, including statements about our beliefs and
expectations, are forward-looking statements and should be
evaluated as such. Forward-looking statements include any statement
or information concerning possible or assumed future results of
operations, including descriptions of our business plan and
strategies. These statements often include words such as
“anticipate,” “expect,” “plan,” “believe,” “intend,” “project,”
“forecast,” “estimates,” “projections,” “outlook,” “ensure,” and
other similar expressions. These forward-looking statements include
any statements regarding our plans and expectations with respect to
Bright Health Group, Inc. Such forward-looking statements are
subject to various risks, uncertainties and assumptions.
Accordingly, there are or will be important factors that could
cause actual outcomes or results to differ materially from those
indicated in these statements. Factors that might materially affect
such forward-looking statements include: our ability to continue as
a going concern; our ability to comply with the terms of our credit
facilities, including financial covenants, both during and after
any applicable waiver period, and/or obtain any additional waivers
of any terms of our credit facilities to the extent required; our
ability to sell our Medicare Advantage business in California on
acceptable terms, including our ability to receive the proceeds
thereof in a manner that would alleviate our current financial
position; the failure to satisfy or obtain a waiver of any closing
condition in our agreement to sell our Medicare Advantage business
in California to Molina Healthcare, Inc. (the “Molina Purchase
Agreement”); our ability to comply with the terms of the Molina
Purchase Agreement; whether our new credit facility will satisfy
our working capital needs pending the closing of our sale of our
Medicare Advantage business in California; our ability to comply
with the terms of the risk adjustment repayment agreements; our
ability to obtain any additional short or long term debt or equity
financing needed to operate our business; our ability to quickly
and efficiently wind down our Individual and Family Plan businesses
and Medicare Advantage businesses outside of California, including
by satisfying liabilities of those businesses when due and payable;
potential disruptions to our business due to our corporate
restructuring and resulting headcount reduction; our ability to
accurately estimate and effectively manage the costs relating to
changes in our businesses offerings and models; a delay or
inability to withdraw regulated capital from our subsidiaries; a
lack of acceptance or slow adoption of our business model; our
ability to retain existing consumers and expand consumer
enrollment; our and our Care Partner’s abilities to obtain and
accurately assess, code, and report risk adjustment factor scores;
our ability to contract with care providers and arrange for the
provision of quality care; our ability to accurately estimate our
medical expenses, effectively manage our costs and claims
liabilities or appropriately price our products and charge
premiums; our ability to obtain claims information timely and
accurately; the impact of the ongoing COVID-19 pandemic on our
business and results of operations; the risks associated with our
reliance on third-party providers to operate our business; the
impact of modifications or changes to the U.S. health insurance
markets; our ability to manage the growth of our business; our
ability to operate, update or implement our technology platform and
other information technology systems; our ability to retain key
executives; our ability to successfully pursue acquisitions and
integrate acquired businesses; the occurrence of severe weather
events, catastrophic health events, natural or man-made disasters,
and social and political conditions or civil unrest; our ability to
prevent and contain data security incidents and the impact of data
security incidents on our members, patients, employees and
financial results; our ability to comply with requirements to
maintain effective internal controls; our ability to adapt to the
new risks associated with our expansion into ACO Reach; and the
other factors set forth under the heading “Risk Factors” in the
Company’s reports on Form 10-K, Form 10-Q, and Form 8-K (including
all amendments to those reports) and our other filings with the
SEC. Except as required by law, we undertake no obligation to
update publicly any forward-looking statements for any reason after
the date of this release to conform these statements to actual
results or changes in our expectations.
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version on businesswire.com: https://www.businesswire.com/news/home/20230919439597/en/
Investor Contact: Stephen Hagan
IR@brighthealthgroup.com
Media Contact: media@brighthealthgroup.com
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