NY State puts hold on processing Health Republic medical insurance claims

The state has put a hold on processing most claims for Health Republic, causing alarm among hospitals and doctors who fear they won't be paid the millions of dollars they're owed.

The federally backed insurer is going out of business effective Nov. 30 due to financial problems, according to state officials. The 215,000 Health Republic enrollees in New York have until then to find new coverage.

Matthew Anderson, a spokesman for the state Department of Financial Services, said Thursday the agency has told MagnaCare, which contracted with doctors and hospitals and then leased those provider networks to Health Republic, that payments for many services "are on hold to conserve assets."

The agency had already indicated that hospitals and doctors might not be fully compensated. Providers, however, are still obligated to provide services, Anderson said.

"This is going to be a tremendous loss and tremendous weight on the industry," said Cara Henley, director of insurance and managed care at Healthcare Association of New York State, which represents hospitals and health care networks.

She estimated that Health Republic owes hospitals at least $150 million through October.

At least one medical practice said it has told Health Republic patients it would provide services -- but they will have to pay out of pocket.

Shannon Hughes, office manager of Mariwalla Dermatology, said about a quarter of the West Islip practice are Health Republic patients. Hughes said that while "we will do everything to provide care," they would require those patients to pay. She said their most recent payments from Health Republic are from February. "This is serious; it's a crisis," she said.

Adrienne Esposito, executive director of the nonprofit Citizens Campaign for the Environment in Farmingdale -- whose four employees are enrolled in the insurance -- said she was "deeply, deeply disturbed" when she was told she would have to pay out of her own pocket to have a skin spot checked. A previous skin cancer cost $5,000 to remove, $2,000 of which she had to pay even with the coverage, she said.

"Since this is not a luxury visit or a routine checkup, it is very disconcerting," she said.

State Sen. Kemp Hannon (R-Garden City), chair of the Senate Health Committee, and state Sen. James Seward (R-Milford), chair of the insurance committee, sent a letter Tuesday to Anthony Albanese, acting superintendent of the department of financial services, and Donna Frescatore, executive director of NY State of Health, expressing "grave concern over how your offices are handling the [Health Republic] shutdown. . . . At this time it is of the utmost importance to provide a seamless transition for the more than 200,000 Health Republic members into new coverage . . . as well as minimizing the impact on providers and other insurers."

News that "payment of claims will likely be 'modest' at best is alarming and sends the wrong message," they said.