Taxpayer-backed health plan in Austin breaks with Seton over rates

Nov. 18--Central Health's transfer this month of $8 million more to its nonprofit health plan comes, for the first time, as a possible loan, with three decades to pay it back.

If the Texas Department of Insurance approves the request from Central Health, Sendero Health Plans would pay back the amount -- assuming it ever achieves a surplus. The nonprofit health plan has been beset by deficits since its inception three years ago, and to date, Central Health has set aside $45.9 million in taxpayer money to help it stay afloat.

In addition to the $8 million that Central Health allocated this month, the organization has transferred $33.8 million to Sendero over the years and has $4.1 million remaining, said Monica Crowley, a spokeswoman for Central Health, Travis County's taxpayer-funded hospital district. That does not mean all of the transferred money has been spent, because the Texas Department of Insurance requires some to be held in reserve to ensure that Sendero can cover claims.

Crowley said she could not reveal the reserve amount because the information is proprietary.

Sendero was created in March 2012 and offers three kinds of coverages -- a Medicaid HMO plan, Children's Health Insurance Program coverage and an Affordable Care Act plan called IdealCare. Financial losses between March 2012 and August 2014 are $17.3 million, according to reports filed with the Texas Health and Human Services Commission.

Filings since August are not available.

Sendero was not expected to have surpluses in its early years, but with its fourth year in business about to start, a break-even point continues to be elusive. Two reasons are: Sendero is competing against more Medicaid HMOs than it anticipated -- three others -- and a 2012 U.S. Supreme Court decision allowed states to opt out of expanding Medicaid under the health care law, which Texas has done.

Central Health officials say Sendero helps fulfill a mission of providing care to those who need it most. For months, the board has been receiving updates on Sendero in closed session.

Earlier this month, when the board transferred $8 million to Sendero to meet its financial needs through December, board members said they wanted to create a system for repayment, if Sendero ever has a surplus. Under the terms, Sendero would repay the money over 30 years, starting Dec. 1, with proposed interest at the prime rate, plus one-fourth of 1 percent, Crowley said.

Central Health board member Lynne Hudson, who also serves on the Sendero board, said the repayment idea is not a major policy change but instead "a way to formalize the relationship" between Central Health and Sendero.

If state insurance officials don't approve the plan, the transfer would remain in place without any payback obligation, Hudson said.

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