CHARLOTTESVILLE - Optima Health, a subsidiary of Sentara, reported record high profits in its 2018 annual financial filings. Gross profits in its Individual Market, where Optima operated as a monopoly, surged 10-fold in 2018 to $332 million. Optima fell well short of the Affordable Care Act (ACA) mandated Medical Loss Ratio, which stipulates that insurers must spend at least 80% of collected premiums on medical claims, spending only 55% across its markets in Virginia. Optima’s per-member profits were the highest in the nation among insurers with at least 5,000 members.

Optima raised its rates by an average of 80% across Virginia in 2018 after its only competitor, Anthem, left the market. Optima’s rate increase in Charlottesville, VA drew national attention as they tripled rates on consumers in that area, charging a typical family of four around $3,000 per month for their cheapest, high deductible plans. These rates were the highest ever levied on consumers anywhere in the nation under the ACA.

Members of Charlottesville for Reasonable Health Insurance (CRHI), a grassroots advocacy group that formed in response to Optima’s 2018 rates, have spent the last 18 months investigating Optima’s rates and the underlying state filings. Multiple irregularities and misrepresentations reported by CRHI prompted an investigation by the Virginia Bureau of Insurance.

“This annual report reveals that while Optima increased its rates to historically high levels for 2018, its claims per member actually dropped 15% from the prior year. This contradicts the justifications Optima cited for its unprecedented rate increases in 2018,” says Karl Quist, one of CRHI’s founding members. “Comparing Optima’s year-end numbers to other insurers nationwide lays bare the degree to which Optima has overcharged Virginia customers.”

Nationwide, among the 150 Insurers with at least 5,000 members, Optima has:

  • The highest profits per member of any insurer
  • Profits per member 4-times the national average
  • Profits per member 3-times those of Anthem Healthkeepers
  • The highest average premiums of any insurer
  • The 4th lowest Medical Loss Ratio (MLR)
  • A Medical Loss Ratio of 58%, vs a Median MLR of 78%

“Optima has claimed that this low MLR will trigger a mandatory rebate to consumers, and therefore no harm has been done. But this simply isn’t true. First of all, only a fraction of the overcharges will be rebated to the families who paid these inflated rates. Secondly, because rebates are calculated on a statewide basis, consumers in markets like Charlottesville who paid almost 60% higher premiums than in the rest of the state will receive an even smaller fraction of the amount they were overcharged. Lastly, thousands of consumers were completely priced out by Optima’s rates and had to go uninsured.”

Stovall also expressed concern that Optima continues to mislead state regulators and overcharge consumers. “When presenting new rates for 2019 in July of 2018, Optima representative James Juillerat replied to direct questioning by State Corporation Commission’s Judge Mark Christie that Optima’s 2018 MLR was 74.9% and likely to rise. It beggars belief that by July of 2018 Optima wouldn’t have known that its MLR was actually falling significantly to one of the lowest in the country, and that its rates were going to be proven completely unjustified. The regulators relied on these statements in evaluating Optima’s future rates and we believe they were purposefully misleading.” Audio of Optima’s statements to the SCC can be found at https://clyp.it/pnkgq01m

Charlottesville For Reasonable Health Insurance is a grassroots healthcare consumer advocacy group formed in response to the tripling of premium prices in 2018. CRHI is currently disputing the Charlottesville rates in the Individual Market, and lobbies federal and state representatives for laws that provide everyone with comprehensive and affordable health insurance. The group has almost 1000 members and can be found on Facebook.


Release from Optima Health:

Today, Optima Health released the following statement in regard to its 2018 financial filing with the Virginia Bureau of Insurance (BOI). When reviewing, the following background is helpful for context:

Background:

  • Optima Health ended the year with an overall margin of 5.7%. Optima lost $38M on its CCC+ (Commonwealth Community Care) and Medicaid plans and lost $8.7M on Medicare plans, offsetting gains in the individual insurance product.
  • The filings reflect gross margins of 35% for the Individual Exchange products across all of Virginia. This amount does not account for administrative expenses (brokerage fees, claims processing, marketing, etc.) that totaled more than $60 million in 2018. The 35% does include the estimated amount to be paid back to members through a rebate. After accounting for the $60 million in expenses, the resulting margin is 24.6%.
  • Rebates for 2018 will be finalized this summer after we receive risk adjustment revenue calculations from CMS. Rebates would then be distributed in August or September.
  • Optima Health observed all federal and state requirements in setting rates for 2018. The Virginia Bureau of Insurance (BOI) reviewed and approved our filings.
  • Our Individual product margin is a reflection of 1) Cost Sharing Reduction (CSR) payments and the potential elimination of the individual mandate; and 2) a quadrupling of membership due to the withdrawal of Anthem, Aetna and UnitedHealthcare.
  • Improved financial outcomes on Individual products are occurring nationwide. In 2017, Optima’s competitor Anthem ended the year with a 30.9% margin. Overall, insurers across 43 states paid $707M in rebates to nearly six million consumers based off plan year 2017.

Statement:

Virginia Beach, Va. (April 29, 2019)—Today, Optima Health released the following statement in response to its 2018 financial filing with the Virginia Bureau of Insurance (BOI):

“Optima Health’s filingsreflect a year of unique challenges after all of the national health insurance carriers – Anthem, Aetna and United Healthcare – left Virginia’s Affordable Care Act (ACA) exchange market due to uncertainty in Washington around the elimination of Cost Sharing Reduction (CSR) payments. When factoring in the burden of CSR elimination, Optima had to alter rate structures for individual products to retain quality of service. We recognize the significant impacts the increase has had on some families in the Charlottesville market who did not qualify for federal subsidies. Optima will provide rebates, subject to approval by the Centers for Medicare and Medicaid Services, to individual plan members in compliance with an ACA protection mechanism called Medical Loss Ratio (MLR). Optima carefully observed all federal and state requirements in setting rates for 2018, and the Virginia Bureau of Insurance reviewed and approved our filings. Earlier today, statements by an advocacy group significantly overstated Optima’s profit margin. In reality, the margin was 24.6% when factoring in over $60 million in administrative costs unaccounted by the advocacy group.”