OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has placed the financial strength rating (FSR) of B++ (Good) and the issuer credit rating (ICR) of bbb for Oregon Dental Service (ODS) and its subsidiaries: Moda Health Plan, Inc. (Moda Health), Dentists Benefits Insurance Company (DBIC) and Northwest Dentists Insurance Company (NORDIC) under review with negative implications. All companies are domiciled in Portland, OR, with the exception of NORDIC, which is domiciled in Bothell, WA.
The rating actions follow the announcement by the Centers for Medicare & Medicaid Services (CMS) on the 2014 risk corridors receivable proration. The risk corridors program is one of three programs established through the Affordable Care Act to provide stability to the individual and small group markets since market reforms and health insurance exchanges began in http://flashfluideffect.com/blog/2015/08/13/can-afford-cosmetic-dentistry/ 2014. The program was expected to be budget neutral or self-funded. For the 2014 program year, risk corridors collections are considerably lower than risk corridors payments submitted by health insurers for their individual and small group health business. As a result, CMS announced that payments to insurers will be prorated to 12.6% of submission. Moda Health currently has an $89.5 million receivable for the 2014 risk corridors.
The under review status for the Oregon Dental Service and its subsidiaries reflects the considerable capital strain that the potential write down of Moda Healths risk corridors receivable will likely have on the organization. The company also has a receivable booked for the 2015 risk corridors program. In addition, Moda Health has reported net losses through the first half of 2015. Given these factors, A.M. Best has concerns regarding the 2016 pricing for these products, as well as maintenance of adequate risk-adjusted capital for the organization.
The ratings of Oregon Dental Service and its subsidiaries will remain under review pending discussions with the companys management regarding any adjustments to the risk corridors receivables, 2016 product pricing and risk-adjusted capital levels at the insurance companies.
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Bests Ratings & Criteria Center.
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