Department Appoints Conservator to Oversee Alameda Alliance for Health Due to Ongoing Financial Solvency Issues

SACRAMENTO, Calif., May 6 -- The California Department of Managed Health Care issued the following news release:

The Department of Managed Health Care (DMHC), the state department that regulates health plans, today took possession of Alameda Alliance for Health due to serious, ongoing financial solvency issues.

"Today's action will protect Alameda Alliance's members and ensure they continue to get the care they need," said DMHC Director Shelley Rouillard. "Our goal is to bring the plan into a healthy financial condition as quickly as possible and to transition it back to local control."

The local initiative health plan serves more than 200,000 people in Alameda County, most of whom are Medi-Cal beneficiaries.

"DMHC's response today will protect Medi-Cal members while the serious problems threatening Alameda Alliance's viability are addressed," said Department of Health Care Services (DHCS) Director Toby Douglas. "DHCS will work closely with DMHC to correct these problems and establish a firm foundation for local control of the Alliance."

Alameda Alliance's financial issues include failure to maintain minimum tangible net equity, lack of working capital and a "going concern" opinion from the plan's most recent independent audit report. Contributing to the financial issues is the plan's failed conversion to a new claims payment system after spending more than $9 million over the past three years. The backlog of claims is growing daily and currently stands at more than 280,000.

The plan's financial issues first surfaced last summer, when it filed its financial statements for the quarter ending June 30, 2013 showing that its tangible net equity level dropped below the state minimum standard. The DMHC took multiple steps to assist Alameda Alliance to become financially solvent, including conducting financial examinations, placing the plan under a corrective action plan and working with the plan to accept a voluntary monitor. Alameda Alliance failed to implement necessary corrective actions and its financial problems continued to worsen.

As a result, to ensure Alameda Alliance's enrollees continue to get care they need and its providers continue to get paid, the DMHC took today's action and appointed Mark Abernathy of Berkeley Research Group to serve as the plan's conservator. Abernathy has more than 30 years of experience working in the health care industry spanning a variety of providers, payers and other health care entities, including Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), hospitals, physician groups and outpatient diagnostic centers.

On May 8, 2014, the DMHC will request that the Alameda County Superior Court confirm the appointment of Mark Abernathy as conservator. The conservator will provide a report to the DMHC within 90 days, then every 30 days following. The DMHC will determine next steps based upon the conservator's reports.

Alameda Alliance members will continue to receive coverage through Alameda Alliance and their care will not be interrupted while the conservator works to bring Alameda Alliance into a healthy financial condition. Members with questions, or any Californian who has questions or concerns about their health coverage, should contact the DMHC's Help Center at 1-888-466-2219 or online at HealthHelp.ca.gov.

The Director's order can be found here:

http://wpso.dmhc.ca.gov/enfactions/docs/2111/1399395882779.pdf

The request for confirmation can be found here:

http://wpso.dmhc.ca.gov/enfactions/docs/2111/1399398952221.pdf

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