Bright Health makes progress towards ACA insurance business wind-down

Bright Health Group announced it continues to make progress on the wind-down of its ACA insurance business. The company has made significant progress paying down its medical claims obligations and is on track with prior forecasts. As of the end of August, the company believes that its claims runout is over 98% complete. Bright Health’s final risk adjustment obligations across its ACA insurance business markets were consistent with expectations at year-end 2022 and the end of the Second Quarter 2023. As of 9/19, Bright Health has paid $1.5B to the Centers for Medicare & Medicaid Services, which represents 80% of its final ACA insurance business risk adjustment obligations. Bright Health also announced that its insurance subsidiaries in Colorado, Florida, Illinois and Texas have entered into repayment agreements for a principal amount of $380M with CMS with respect to the unpaid amount of the risk adjustment obligations. The principal amount of the repayment agreements is due in 18 months and bears interest at 11.5%. Exclusive of its obligations under the repayment agreements, Bright Health expects to have approximately $105M in excess cash surplus in Colorado, Florida, Illinois and Texas, after reserving for expected medical costs and other anticipated wind-down expenses. The company further expects to recover approximately $115M in regulatory capital surplus in its other markets, subject to final claims runout and regulatory approval. Together, this results in an estimated net risk adjustment obligation of $160M, before interest costs, after applying estimated excess cash reserves and regulatory capital surplus against the outstanding principal amount under the repayment agreements. The company intends to use a portion of the proceeds from the pending sale of its California Medicare Advantage business to pay any remaining amounts due under the repayment agreements.