Complicated panorama in controversy over First Medical’s payments to suppliers

Complicated panorama in controversy over First Medical’s payments to suppliers
Complicated panorama in controversy over First Medical’s payments to suppliers

“Due to non-payment, patients will not be treated. First Medicaleffective July 1, 2024,” a doctor from the company’s supplier group announced on social media this week.

An undetermined number of providers have also decided not to serve patients from that company, which has caused beneficiaries of the Government Health Plan have to change doctors or insurers to avoid interrupting their treatments.

While the government blames First Medical for failing to pay suppliers for several months – one of the pillars of the contract to manage the Vital Plan – the insurer accuses it of not reimbursing them for the adjustment of premiums retroactive to last year.

“It is a requirement that every insurance company (that administers the Vital Plan) sign a contract that ensures that it has 200% financial liquidity,” he said. Roxanna Rosarioexecutive director of the Health Insurance Administration (ASES).

He warned that in the event of any emergency that delays the monthly payment of premiums to insurers, they must continue to provide services, including payments to suppliers.

He added that two letters of intent to fine First Medical have been issued for failing to comply with a corrective plan, which includes reimbursing late payments to suppliers. Both sanctions are under appeal. They also issued a first notice that could result in the cancellation of the contract with First Medical if the company does not disburse those late payments on or before August 1.

“It is incorrect to say that they cannot pay (the suppliers) because the government has not paid (the adjustment of the premiums),” reiterated Rosario, who commented that ASES has received 12 complaints from suppliers regarding this situation.

He noted that First Medical’s pattern of non-payment dates back more than six months, even before the renegotiation of rates by the administration of the Vital Plan.

According to Rosario, actuaries are currently discussing the amount to be paid to the four insurance companies that manage the Health Reform (MMM, Triple S, Mennonite Health Plan and First Medical). She assured that the payment of the base premium has continued to be issued on the first 13 days of the month, while the retroactive disbursement for the adjustment to the premiums will be made in July.

The head of ASES reiterated that these companies must pay 95% of supplier invoices within 30 days and the remaining 5% within 50 days.

The Office of the Insurance Commissioner has been monitoring the financial situation of First Medical in light of the operational losses they have suffered. This was stated by the Insurance Commissioner, Alexander Adamswho stated that the company is financially solvent and rejected the idea that its situation requires any major action, such as a receivership.

“They are not in a situation of insolvency”he emphasized, although he highlighted that First Medical is facing a period of operational losses, mainly due to the margin of utilization of services, especially in the area of ​​medicines.

On June 25, he said, his office issued an order against First Medical to reduce outstanding claims in its line of business to $6 million. This is in addition to an action plan they have with the company.

“But there is no decline in its operations at the moment,” he insisted, adding that the company has shown that it is increasing its capital.

“What we have is a cash flow situation in terms of accounts receivable”he added, commenting that they are investigating a complaint from a hospital against First Medical for alleged non-payment.

Jose ValentinCEO of First Medical Salud, commented that as soon as ASES and the Medicaid program release the funds for the adjustment of retroactive premiums, they will comply with the outstanding late payments to providers. He argued that changes in Medicaid policies have brought challenges in payment reconciliation and patient eligibility, among other operational processes.

He warned that ASES owes the four insurance companies that manage the Vital Plan $340 million, of which $85 million correspond to First Medical. “This has impacted all the insurance companies (that manage the Reform),” he stressed.

Juan Dominguezsenior vice president of Corporate Development at First Medical, said that without appropriate adjustments, ASES has been issuing inefficient premiums. “They have been giving 88 cents out of every dollar (of premium),” he said.

According to Valentín, $163 million is still pending payment to the four insurers of the Vital Plan for the rate review from January to September 2023. He added that the company’s profit margins have been minimal, compared to those of other insurers that provide Medicare Advantage services.

The action plan to which they are subjected, he said, includes a contribution of $12.5 million from shareholders. He anticipated that the company hopes to exit this corrective plan by the end of the year.

“Even though ASES has not paid us the increase in the retroactive premium, which amounts to around $90 million, they have continued to pay us the base premium and, consequently, in our financial responsibility, MMM has continued to pay all our suppliers in the Vital segment,” he commented, for his part, Jonathan BonetMMM spokesperson.

It was not possible to obtain comment from Triple S or the Mennonite Health Plan.

While the doctor Carlos Diaz Velezpresident of the College of Physicians and Surgeons, called on suppliers with late payments from First Medical not to interrupt their services, but to give the company the opportunity to issue these disbursements this month, as they have promised.

ASES urged First Medical policyholders affected by this situation to contact the Enrollment Counselor at 1-833-253-7721 Suppliers with invoices from this company that are more than 30 days late are asked to call 787-474-3300.

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