Insurtechs in the widening gyre: Bright Health sued for claims non-payment, fined $1M by Colorado; Clover Health lays off 10%, outsources operations

When the centre cannot hold, more revelations are at hand.

Bright Health, facing insolvency and a violation of a liquidity covenant by the end of this month, is now facing a lawsuit by health system SSM Health in the US District Court for the Western District of Oklahoma. At issue: payment of $13.1 million for 2,541 unpaid claims incurred for services SSM provided to Bright Health members between 1 January 2020 and 7 February 2023. This three-year plus timespan is not a simple glitch. SSM alleges in the suit that it provided $15.6 million worth of services in total to Bright Health plan members across facilities in three regions. In Oklahoma, SSM Health’s base, Bright exited Oklahoma’s Affordable Care Act exchange in December 2022 while under investigation by regulators. SSM has no contract with Bright to discount services in return for access to Bright’s network so charges the ‘rack rate’. The lawsuit docket is listed here though PACER is restricted access. FierceHealthcare

Bright Health is also under serious challenge at the state level. It was fined $1 million by the Colorado Division of Insurance (DOI) for violations during 2021-22. According to the DOI release, the complaints and violations centered on four areas: 1) failure to pay provider claims according to Colorado law; 2) failure to communicate with their members; 3) inability to accurately process consumer payments and accounts; 4) untimely processing of claims for physical and behavioral health coverage. $500,000 must be paid now, with the remainder held for specific improvement and compliance with metrics. Department of Regulatory Agencies (DORA) release  Bright is also under investigation in Tennessee, Texas, and Florida; it is under regulatory supervision in Florida and Tennessee with Texas considering receivership. Bright Health shares today closed at $0.164 and is on the verge of being delisted from the NYSE. Our recent coverage here.

New Jersey’s Clover Health, while not near the extremis that Bright is in, is cutting and outsourcing its way to profitability. Announced on Monday was a ‘corporate restructuring’ cut of 10% or 66 employees, based on public estimates of 656 (Pitchbook). Simultaneously, Clover’s CEO, Andrew Toy, announced outsourcing of core Medicare Advantage health plan operations to UST HealthProof in a move to increase operational efficiencies and reduce administrative costs. Both the layoffs and the UST implementation are expected to incur a 2023 first-half charge of $7-9 million, shifting to a $30 million savings beginning in 2024. Both moves were predictable as the company posted an $84 million loss in Q4 2022, a slight narrowing over prior year. Clover release, FierceHealthcare    Clover shares on Nasdaq were also below the delisting threshold at $0.80. Also industry analyst Ari Gottlieb on its overdue-ness on LinkedIn.

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