HealthSpan backs away from Obamacare plans; dissolves Northeast Ohio physicians group

HealthSpan pulls away from selling Obamacare plans

In this March 15, 2014 photo, a volunteer health care worker wears a t-shirt, getting people to sign up for health coverage. HealthSpan and other insurers are backing away from Obamacare plans after raising concerns about financial losses. (AP Photo/J Pat Carter)

Cleveland-based insurer HealthSpan is disbanding its physicians network and has notified brokers it will stop paying commissions for small group and individual customers, citing concerns about its financial viability in those markets.

The company, which insures 200,000 people statewide, also said it has laid off employees in its small group and individual sales units. The decision to back away from those markets raised alarms among local brokers who stand to lose commissions and assistance from HealthSpan in serving their clients.

"I'm concerned for my clients' ability to work with a company that is making such dramatic moves," said Chris Gonda, president of Better Solutions Enterprises, a brokerage in Lakewood. "People are going to get hurt by this."

A spokesman for HealthSpan said the company will continue to help individual and small business customers with questions and concerns, although it will have to do so with fewer employees. The spokesman, Chuck Heald, said the company is pulling away from those markets because it determined it can compete more effectively by focusing on its Medicare and large-group products.

"We're trying to remain affordable," Heald said. "We had some significant increases in our plans for 2016 -- there's no doubt about that."

HealthSpan is not the only insurer to pull away from the individual market focused on people who buy plans through the federal exchange created under the Affordable Care Act. UnitedHealthcare has also expressed concerns about its financial performance in the market, signaling that it may pull out in 2017.

In addition to the changes in its small group and individual businesses, HealthSpan also announced Friday that it will dissolve its physicians group in Northeast Ohio by March 31 of next year.

The company said it hopes many of its doctors will transition to jobs with its other network partners, including MetroHealth, Summa Physicians and Mercy Health. But there is no guarantee doctors will get jobs with those organizations or that members will be able to keep their doctors. Heald said the company will hold a job fair to help its support staff, including nurses, technicians and other employees, find jobs with other network providers.

The decision to wind down the physicians network reflects the company's difficulty making money with an unusual business model in the region of serving as both an insurer and direct provider of medical services. HealthSpan began providing direct care after it acquired Kaiser Permanente of Ohio in 2013.

Brokers who sell the company's products said Friday that they expect to face considerable losses from the company's decision to stop paying commissions on small business and individual customers.

HealthSpan said it would stop paying commissions on individual Affordable Care Act customers effective Dec. 30. It will stop paying commissions on small business customers Jan. 31.

Gonda, the broker from Lakeville, said he may have to consider laying off staff as a result of the company's decisions, though he declined to specify how much money his firm will lose.

Leslie Dus, president of Benefits Management Agency Inc. in Westlake, said he will not suffer large losses, but that these kinds of sudden decisions create significant turmoil in an already difficult market.

"A lot of us are just trying to keep our heads above water, and it makes it impossible to do business," Dus said. "And what it's doing to the public is even worse than what it's doing to us."

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