Topics: Obamacare

Obamacare health co-op outsources services to a company rated 'F' by Better Business Bureau

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Watchdog,Richard Pollock,Obamacare,New York,Health Care,Accountability,Health Care Coops

Obamacare’s flagship health insurance co-op in New York has outsourced its consumer services to a company awarded an “F” rating by the Better Business Bureau.

Health Republic Insurance of New York, an Obamacare co-op, markets itself to consumers as a nonprofit insurance company that is “consumer-centric.”

The co-op also vowed that it would provide superior service and "lower costs" than standard for-profit, private-sector insurance companies.

Insurance experts fear the co-op’s bargain-basement approach may, however, be leading to poor consumer service.

In 2012, the Department of Health and Human Services awarded Health Republic $174 million. It was the largest single loan made under a $2 billion program authorized by Obamacare to establish two dozen health insurance co-ops to compete with traditional private insurance companies.

At some point after being awarded the federal money, Health Republic decided not to administer its own consumer and claims service. Instead it outsourced the work, along with overall management, to the POMCO Group of Syracuse, N.Y.

“No doubt they were cheap and the bottom feeders went there,” said Craig Hasday, chief operating officer of Frenkel Benefits and legislative committee chairman of the New York State Association of Health Underwriters.

Hasday called Health Republic “an administrative nightmare.”

Hasday and other officers of the association convened a special conference call on Jan. 21 with New York state insurance regulators about the co-op's poor service.

The POMCO Group is not accredited with the state’s Better Business Bureau and it has never provided the business group with any information about its corporate activities, according to Peggy Penders, a New York BBB spokeswoman.

She said POMCO has not shared any business information with the BBB since 2007.

The New York BBB has received six complaints about POMCO. The spokeswoman also noted that POMCO is one of the two upstate New York firms with the highest number of consumer complaints over a 36-month period.

Two-thirds of POMCO's six complaints were tied to “problems with product and service.” One was listed by the BBB as "billing/collection issues," and another as "delivery issues."

The POMCO Group also “failed to respond to the BBB to resolve or address the complaint issues” with a customer in July 2012, according to the agency’s web site.

The BBB agency web site notes, “While businesses are under no legal obligation to provide BBB with information, the failure of a business to provide background information may lead to a lowered grade.”

As a result, BBB rated POMCO with an “F,” grade, the lowest possible ranking. The bureau says the rating currently stands.

Ebony Britt, POMCO's marketing manager, told the Washington Examiner the BBB “doesn’t have a clear understanding of the business and its practices."

However, she could not explain why the company had not responded to the Better Business Bureau since 2007. Nor could she provide an explanation why her company had refused to respond to the BBB about a 2012 consumer complaint. “I could not speak to that specifically," she said.

Britt further could not address the high number of complaints the BBB had found in a comparison with 30 similar companies in her region.

“I could not speak to the 30 BBB groups," but, Britt added, “I did compare us with our largest competitor in the area, and they had 17 complaints in the same timeframe and we had six.” She declined to identify the competitor with the 17 complaints.

Consumers have complained of many administrative snafus with Health Republic. Even though the firm's policies were to go into effect Jan. 1, many consumers report they have not received confirmation of their coverage.

Others say that the company failed to include coverage for family members in plans and many have yet to receive their insurance ID cards.

On Sept. 23, one week before Health Republic's Oct. 1 launch of coverage signups, the POMCO Group announced it was "currently hiring an estimate of 40 employees to support” Health Republic.

James D. Schutzer, president-elect of the insurance underwriters association, told the Examiner he believes most of POMCO’s new hires were unfamiliar with Health Republic.

“They were just bringing people on who probably haven’t been there that long. You know, the company is brand new to begin with, so anybody who is working there can’t be working there for much more than a few months,” he said.

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