Paramount, the insurance company owned by Toledo, Ohio-based health system ProMedica, is contemplating dropping out of Medicaid in the state after losing money in the program this year.
Paramount reported an operating loss of $102.8 million in the nine months ending Sept. 30, driven by Medicaid losses which the company pinned on inadequate rates and enrollment errors. That compares with an operating income of $26.8 million during the same period in 2018. Aside from Medicaid, Paramount’s other product lines were profitable, the company said.
“It is our strong desire to remain in the Medicaid program,” ProMedica Chief Financial Officer Steve Cavanaugh said during an investor call on Thursday. “But if we are in a situation where the rates are not adequate to support the business where we would be taking material losses, we would probably downside our exposure to this business by either partially exiting or completely exiting the business.”
Paramount has already stopped enrolling new Medicaid members and will maintain the freeze until it ensures that it is receiving rates that reflect the severity of its members’ illnesses. Sicker, more expensive Medicaid members joined the program under Ohio’s Medicaid expansion, which has presented challenges for all five health insurers that participate in Medicaid in the state, Paramount said earlier this year.
Paramount said it is working with the state to correct the $65 million in enrollment errors it has identified so far. It is also working with UnitedHealth Group’s health services subsidiary Optum to find ways to reduce expenses and has identified savings of up to $50 million that it plans to implement this year and next, according to an investor presentation.
Paramount covers more than 237,000 Medicaid members in Ohio, according to its website.