How Medical Mutual of Ohio’s Acquisition of HealthSpan Affects Customers: Q&A with MMO CEO Rick Chiricosta

Medical Mutual CEO Rick Chiricosta Says HealthSpan Acquisition Is Good For Customers

Medical Mutual CEO Rick Chiricosta poses for a portrait at the entrance to the company’s headquarters in Cleveland, OH on Friday, September 4, 2009. (Marvin Fong / The Plain Dealer) MARVIN FONG LE PLAIN DEALER President and CEO health mutual management Rick Chiricosta wants to lose 15 pounds and recently asked his 2,700 employees to join him in a weight loss challenge.

Medical Mutual of Ohio’s agreement to acquire 105,000 HealthSpan customers is the latest upheaval in the rapidly evolving health insurance market. In an interview on Tuesday, Medical Mutual chief executive Rick Chiricosta answered questions about the deal’s impact on prices and customers. Here is what he had to say:

What does this mean for HealthSpan customers who have faced considerable uncertainty in recent months?

It means an element of stability for them. They will be in good hands with us. Our goal, like HealthSpan’s, is to bring as many of their members as possible to our coverage. We’ve been around for 81 years and have been taking good care of people for a long time. For [HealthSpan customers] It’s good news. This means that they will not be left to their own devices to determine where they will end up.

Does anything change immediately for HealthSpan members?

People are covered. I don’t think the average person needs to do anything other than let this thing take its course. It’s going to take us a little while to figure out how to make the transition from these members to us in terms of network makeup and things like that. We have the largest network in the state of Ohio, so I think this will only be positive for members who will have equal or more choices.

Are you concerned that HealthSpan members decide to forgo this agreement and register with an insurer other than Medical Mutual?

People always have that option. When insurers sell blocks of business from one insurer to another, there is always that potential. Someone says, “I’m not sure I like the acquiring company. I could choose to go elsewhere. We don’t care. We think this is a really positive initiative for their members and we think we are going to get a great response.

How will this deal affect prices for consumers?

I don’t think it’s going to drive up the prices. If you’re talking about the insurance industry in general, that’s a pretty minor number of members when you consider the Ohio market as a whole. With regard to HealthSpan customers directly, [HealthSpan] was not doing well at the rates they were charging, so it is possible that, individually, some people were paying more because some of the prices they were charging may not be sustainable in the long run.

Can you disclose the financial terms of the agreement with HealthSpan?

I can’t give you any of the numbers. Obviously, there is a compensation and an incentive on both sides. We’re both going to be happy plus the members who end up landing with (Medical Mutual.) It’s going to be good for both sides, but we’re not going to go into specifics.

Why was this an attractive offer for Medical Mutual?

We have an infrastructure that can handle additional business at no additional cost. This proves something that I have been saying for several years: I don’t know why or how some of these small carriers, with all the regulatory aspects of Obamacare, are able to keep up with the changes. It is not the law that is the problem. It’s the fact that it has changed literally dozens of times since it was adopted in 2010. I don’t know how a small transporter can keep up. In some cases, they cannot follow because it is very, very difficult.

Don’t you seem like a big fan of the law?

No that’s not true. Honestly, you will never find anything where me personally or MMO has been formally against part of the Affordable Care Act. When I meet politicians and other people, what I tell them is one thing: you passed a law in 2010. Our job was not to challenge the law, but to accept that it was the law of the law. country and serve our members the best way we can and protect them financially and in every other way possible. What does not satisfy us is that in some cases we have invested millions of dollars to prepare one aspect of the law. And literally months or even weeks before part of the law was supposed to come into force, it was delayed, deferred, changed. Some parts of the law have never been applied. When people say they have to repeal Obamacare, I laugh because the truth is if you took all the parts that were changed or never implemented, half is not in place anyway.

Does the HealthSpan Acquisition Agreement improve specific areas of Medical Mutual’s business?

We just re-entered the Medicare Advantage market on January 1. We have been in this space before and we have come out of it. Part of our strategy is that we think we should really be the dominant player in the senior market in Ohio … We bought 14,000 new lives on January 1st.st, which makes us the biggest new entrant in the Medicare Advantage market by a pretty wide margin, so picking up HealthSpan’s Medicare Advantage lives can just build on that strategy.

Will HealthSpan employees be hired by Medical Mutual?

The only thing I can officially tell you is that we are not taking any of their employees into the business. But as we have vacancies throughout the year, people with solid insurance background will be excellent candidates.