The Department of Managed Health Care (DMHC) today took possession of Alameda Alliance for Health due to serious, ongoing financial solvency issues. The health plan'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. The health plan serves more than 200,000 people in Alameda County, most of whom are Medi-Cal beneficiaries.

Contributing to the financial issues is the plan's failed conversion to a new claims payment system, after spending more than $9 million on the new system over the past three years. The backlog of claims, that affects claims dates of service from January 1, 2014 forward, is growing daily and currently stands at more than 280,000. To bridge the financial gap for providers impacted by the failed transition, Alameda Alliance in March mailed advance payment checks of what they estimated was owed to providers to be applied against fee-for-service claims submitted for covered services rendered to plan enrollees.

The California Medical Association (CMA) is working with Alameda Alliance and DMHC to ensure that processing the claims backlog remains a priority as the plan continues to work on the transition to its new claims payment system.

The plan's financial issues first surfaced last summer, when financial statements filed with DMHC showed 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.

To ensure Alameda Alliance's enrollees continue to get care they need and its providers continue to get paid, DMHC today appointed a conservator to oversee the plan's operations. The conservator will also provide a report to DMHC within 90 days, then every 30 days following. DMHC will determine next steps based upon the conservator's reports. According to DMHC, the goal is to bring the plan into a healthy financial condition as quickly as possible and to transition it back to local control.

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.

For more information, see the DMHC's press release on this matter.

It is unclear how today's action will impact the transition of dual eligibles under the Cal MediConnect project, currently scheduled for January 1, 2015, as well as Alameda Alliance's status as a qualified health plan under Covered California for 2015. CMA will provide additional information as it becomes available.

Contact: CMA's reimbursement helpline, (888) 401-5911 or economicservices@cmadocs.org.