Central Health board votes to shut down Sendero Health Plans


Travis County’s health district voted to wind down its nonprofit, Sendero Health Plans, in the next two years.

A majority of Central Health board members said continuing to fund the nonprofit was too risky.

Sendero had struggled for years with financial instability.

After years of financial instability for its nonprofit health insurance provider, Travis County’s health care district is shutting down Sendero Health Plans in the next two years, potentially forcing its 24,000 members to find new health coverage plans.

Central Health board members voted 4-3 Wednesday night to allocate $24 million to the nonprofit in fiscal 2019 and start plans to suspend it. Board Chair Dr. Guadalupe Zamora and board members Cynthia Valadez and Julie Oliver voted against the proposal. Sendero’s board chair, Dr. Charles Bell, abstained, and board member Abigail Aiken was off the dais.

Prior to the vote, the board considered an analysis from a third-party actuarial firm during executive session. Central Health did not immediately release the report, which the American-Statesman has requested under the Texas Public Information Act.

Central Health created Sendero in 2011 with the goal of expanding access to affordable health care coverage to low-income people in Travis County. Since its inception, Sendero has delivered more than $470 million in health coverage to 135,000 people and offered some of the most inexpensive plans in the county, officials said.

Central Health’s decision is subject to the approval of the Sendero board of directors. Travis County commissioners will also need to approve Central Health’s budget Tuesday.

Central Health board members approved a $258 million budget Wednesday that includes a tax rate of 10.52 cents per $100 of taxable value. The proposed rate will cost the average owner of a $326,894 home about $16 more than last year.

FROM JANUARY: With enrollment up, funding down, Sendero gets $26 million boost

Wesley Durkalski, president and CEO of Sendero, thanked the Central Health board Wednesday for its support over the years. He said Thursday that the board is considering its options.

As far as what happens next, Durkalski said, “I think a lot of it will depend on community reaction.”

Durkalski added that Sendero’s 24,000 members should know that the nonprofit is “100 percent committed to continuing to give you the best care possible for as long as we can.”

Sendero has floundered financially since it was created. At the end of last year, the nonprofit was $33 million in the red, according to the most recent Texas Department of Insurance annual data showing its net income after taxes.

Quarterly data shows Sendero’s net income has fluctuated this year, but it ended the second quarter of 2018 with a loss of $6.5 million.

Durkalski said the nonprofit has had to return tens of millions of dollars to the federal government that could have been used to serve qualified patients through the federal risk-adjustment program. The Affordable Care Act requires insurers with healthier patients to help insurers with sicker patients pay for their medical needs. Sendero had to return some of the money channeled from the federal government because its membership is relatively healthy.

READ ALSO: Sendero Health Plans to withdraw from Medicaid, CHIP markets

In May, Sendero cut its Texas’ STAR Medicaid program and Children’s Health Insurance Program plans for its about 18,000 members because of changes to the state’s premium payment rate. That left it with a single plan, its ACA plan, IdealCare. Officials at the time projected losses related to the programs in excess of $800,000 per month.

To date, Central Health has transferred $88 million in taxpayer money to Sendero. The rising costs have led to criticism by some as to why the health district continued to funnel taxpayer money into the health insurance provider.

Central Health Vice Chair Sherri Greenberg said she knew it was an “exceedingly difficult decision” for the board. Greenberg said Sendero has faced volatility in the insurance industry beyond its control.

“I have wrestled with this for several years,” Greenberg said. “I was not here when Sendero was created, but I think it was laudable. … Unfortunately, … it has had great and continuing difficulties, and we have a lot of responsibilities for care here at Central Health.”

Board member Katrina Daniel said she’s been a longtime proponent of Sendero and didn’t have any regrets about funding the effort in the past, but the uncertainty surrounding the insurance market and the future of the ACA was also a consideration.

“I think we invested in Sendero for the right reasons,” Daniel said. “When you talk about Sendero’s losses, … we haven’t lost the money, we spent it on health care, but I think for this particular model … we have more financial stability and certainty on a different path.”

Valadez and Oliver, however, pleaded with fellow board members to continue funding the nonprofit. They supported a plan to retain more risk-adjustment dollars by providing premium assistance to members from Central Health’s Medical Access Program, who tend to require more care.

The Medical Access Program does not provide insurance; instead, it offers health care coverage to Travis County residents with family incomes at or below 100 percent of federal poverty line — that is to say, $25,100 for a family of four in 2018.

“We are at a critical point in time where we have this one last opportunity to move forward with our best asset, our tool to provide a continuum of care … to our needy population, and I ask you please to consider that,” Valadez said before the vote.

Kori Hattemer, director of financial programs with Foundation Communities in Austin, which assists with Affordable Care Act sign-ups, said she’d be “disappointed” if there were fewer options available on the market. But she said it’s too soon to say what the effect of losing Sendero might be, as its board has not yet decided what it will do. The ACA’s open enrollment period runs Nov. 1 to Dec. 15.

“Our approach is to wait and see,” Hattemer said. “We want to make sure people know regardless of what’s going on externally, we’re here to help them … find the plan best for them.”

Central Health President and CEO Mike Geeslin said the agency will keep the community informed about future decisions and work to make the transition smooth for Sendero members.

“Funding decisions always create new opportunities,” Geeslin said. “Central Health will continue focusing on expanding services and bringing health equity to Travis County.”

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