September 22, 2018
(Austin) – The Central Health Board of Managers voted to allocate $26 million for Sendero Health Plans in Fiscal Year 2019, allowing its nonprofit health insurance company to stay in business for at least another year.
Saturday’s decision reverses the board’s Sept. 12 vote to cap funding for Sendero, which likely would have led to Sendero’s exit from the insurance market by 2020.
Central Health held a special board meeting to reconsider Sendero’s future, and hear from community members. About 50 people attended the meeting, and approximately 32 spoke during citizen’s communication. Most spoke in favor of saving Sendero.
“I am so grateful to this board for giving this topic so much thought and consideration, and for all of the community members we’ve heard from today who are so passionate about Sendero,” said Dr. Guadalupe Zamora, Central Health Board Chair. “We heard your passion. We share your passion. And like you, each of my fellow board members is committed to making sure everyone in our community has access to quality health care. I believe Sendero can do this.”
The Central Health Board of Managers felt Sendero was at a crossroads, due to its ongoing financial challenges. During FY 2019 budget discussions, a majority of board members concluded the health plan had to make significant changes – either come up with a plan to be sustainable in the future or responsibly wind down.
To give Sendero at least another year, the board voted Saturday to pursue a strategy of moving hundreds of Medical Access Program (MAP) members and other Central Health patients with complex illnesses and medical needs to Sendero in an effort to leverage more money through the Affordable Care Act’s (ACA) Risk Adjustment Program. Central Health will subsidize their Sendero premiums.
“I will work with Sendero to develop a business plan to leverage more money from the Risk Adjustment Program by transferring some of the sicker MAP members to Sendero,” said Mike Geeslin, President and CEO of Central Health. “However, no one will be forced to move to Sendero – the transition will be optional. We will develop a detailed transition plan that will make this as seamless as possible for those patients who choose to move.”
Board Member Shannon Jones, who originally voted in favor of capping future funding for Sendero, agreed to change his vote and support additional funding with several conditions. Conditions include strict, routine reporting with explicit outcome measures and objectives reported monthly to Central Health, and capping future Central Health financial risk to only include premium assistance for Sendero.
“I was concerned about the faith this community would have in the Central Health Enterprise if we didn’t make this effort,” Jones said. “I believe another year would be appropriate for Sendero to either get its act together or end it.” The board also asked for research into Sendero members who live outside of Travis County being funded by Central Health.
Sendero has for several years faced financial shortfalls and enrollment challenges, but 2018 was an especially difficult year due to changes to the ACA Risk Adjustment Program and the STAR Medicaid and CHIP insurance market.
In January, the Central Health Board of Managers voted to invest an additional $26 million in Sendero, for a FY 2018 total of $36 million, in part because the Risk Adjustment Program did not adequately reimburse Sendero for services provided to its IdealCare members. The Risk Adjustment Program is designed to compensate insurers in the Health Insurance Marketplace whose members are sicker and require more services – and cost more to cover. Insurance plans with healthier members pay into the risk pool since theoretically healthy members have fewer claims and are less expensive to cover. Then in March, Sendero announced its withdrawal from the STAR Medicaid and CHIP insurance market because insurance premiums could not cover the projected cost of care for members. Approximately 18,000 Sendero members transitioned into new insurance coverage.
Board Member Cynthia Valadez made the motion to rescind the board’s Sept. 12 decision to cap Sendero funding, which was unanimously supported. Board Member Maram Musetif subsequently made a motion to approve the Central Health FY 2019 budget, including up to $26 million for Sendero. The money will come from Central Health’s contingency reserves, and will not be spent until Central Health’s CEO has presented a viable strategy for expanding Central Health’s Premium Assistance Program to move sicker MAP members to Sendero. The motion passed unanimously. Dr. Charles Bell, Board Chair of Sendero abstained. Dr. Abigail Aiken was absent due to overseas travel.
Central Health has invested $108 million in Sendero since 2011, and the HMO has delivered more than $470 million in health coverage to 135,000 people. While the Central Health Board makes a funding decision every year about Sendero, the HMO’s Board of Directors is responsible for decisions about the company’s operations and future. Sendero’s Board is expected to meet this week. The Travis County Commissioners Court is expected to vote on Central Health’s budget Tuesday, Sept. 25 , including funding for Sendero.