Travis County’s nonprofit health plan could break even this year, but questions remain about long-term feasibility

Travis County Commissioners heard an update on Sendero Health Plans new business strategy Feb. 26.

Travis County Commissioners heard an update on Sendero Health Plans new business strategy Feb. 26.

Sendero Health Plans—the financially embattled nonprofit health insurance plan that covered about 24,000 Travis County residents in 2018—may break even or turn a profit this year, but county commissioners maintain concerns about its long-term feasibility.

The insurance program, operated by Travis County’s taxpayer-funded health care district Central Health, implemented a new business strategy over the past several months after Central Health reversed a controversial decision to phase out operations of the plan entirely by 2020.

At the end of fiscal year 2017-18, Sendero’s net income suffered $19 million in losses, Sendero CEO Wes Dulkalski told Central Health Board members in December. According to Feb. 26 presentation from Central Health to Travis County Commissioners, revenue estimates for FY 2018-19 currently align with an actuarial report that predicted Sendero could break even or bring in up to $5 million in revenue.

Although Travis County Judge Sarah Eckhardt said she is pleased to hear Sendero is showing signs of progress, she worries about its viability. Travis County Commissioner’s are responsible for approving Central Health’s budget each year, including funding for Sendero.

“I’m happy that [revenue projections] are net positive but these are extremely thin margins,” Eckhardt said.

Precinct 3 Commissioner Gerald Daugherty echoed Eckhardt and said he wants to speak to the Central Health board members.

"I am particularly wanting to talk to the board members who were not supportive of moving forward," he said. "I want to find out how they feel now about this program."

How the strategy was developed


Central Health commissioned two independent actuaries to evaluate a business strategy that would help Sendero secure more funding from the federal government.

A federal program known as the Affordable Care Act Risk Adjustment Program requires ACA plans with the healthiest members to pay back funds to the federal government to be redistributed to health plans with the least healthy members. In the past, Sendero’s relatively healthy population meant it had to make those payments, straining its financial operations.

For Sendero to secure funds from the risk adjustment program, its patient pool needs to have a higher average risk score. This score is a way to measure how much it costs to insure a patient, Central Health CEO Mike Geeslin said.

One key population that could increase Sendero’s average risk score are members of Central Health’s Medical Access Program, or MAP, according to Central Health. MAP is not an insurance plan and is not operated through Sendero, but it allows Travis County residents with incomes 100 percent below the federal poverty level or lower to receive limited health care services without paying any premiums.

Dulkalski said one of the ideal scenarios outlined by actuarial reports predicted that if Sendero could enroll 15,000 traditional, premium-paying members and 500 new MAP members, it would turn a profit in FY 2018-19 because of increased funding from the federal risk adjustment program.

Even though Sendero would pay premiums on behalf of MAP patients, funding from the federal government would offset the added expense. This is because the MAP patients' typically higher risk scores would increase the average risk score of the insurance plan’s total patient population.

The latest numbers show that Sendero took on 12,000 total traditional members and 223 members who transferred over from MAP, Dulkaski said. The total average risk score of Sendero’s patient population is not yet determined, although it will likely be higher than in years past, he said.

“Even if [the average risk score] comes in at half of the projected [average risk score] of 15 we will still break even,” Dulkalski said.

Sendero will find out how much funding it will receive from the federal government some time between May and June, Geeslin said.

“We’re definitely at the forefront of leveraging this availability of funds for this population that is historically underserved,” Dulkalski said. “... We’re still in front, but it’s been a painful ride for everybody.”
SHARE THIS STORY
By Emma Whalen

Emma is Community Impact Newspaper's Houston City Hall reporter. Previously, she covered health care and public education in Austin.


MOST RECENT

In 2020, Capital Metro will put 12 electric buses into service. The first two went into operation Jan. 26 and feature artwork from students in East Austin. (Amy Denney/Community Impact Newspaper)
Capital Metro increases initial investment in electric buses to 12 vehicles in 2020

Capital Metro will now put 12 electric buses into service in 2020.

Dell Medical School will add a new program in the fall 2020 semester, while UT Health Austin will open an ophthalmology and its Ambulatory Surgery Center in 2020. Jack Flagler/Community Impact Newspaper
Health care news to follow in 2020: UT Health Austin expands, Dell Medical School offers new program

UT Health Austin, the clinical practice of Dell Medical School, expanded its walk-in clinic in 2019 and relocated the clinic to the first floor of the Health Transformation Building at 1601 Trinity St., Austin.

The Pediatric Ambulatory Center of Excellence at Dell Children's Hospital is expected to be complete in June 2021. (Rendering Courtesy Dell Children's Medical Center)
Dell Children’s Medical Center campus readies for $113m expansion

Construction of the Pediatric Ambulatory Center of Excellence, or PACE, building is set to begin in March.

A photo of an older couple choosing produce
Neighborhood Note: Drippings Farmers Market relocates for winter

The Dripping Springs Farmers Market will move indoors until spring.

Nick Boyd opened a South Austin real estate company in January. (Courtesy Nick Boyd Real Estate Co.)
Nick Boyd Real Estate Co. now open in South Austin

Nick Boyd Real Estate Co. opened in South Austin on Jan. 1.

New dockless vehicles, such as Revel mopeds, have entered the Austin market, in addition to electric scooters, pictured here in West Campus. (Emma Freer/Community Impact Newspaper)
City of Austin expects to see more dockless vehicles used for longer trips in 2020

When electric scooters first arrived in Austin in April 2018, residents and city officials alike raised concerns about regulations, safety and inconvenience.

Austin City Council directed the Austin Police Department to end enforcement of lower-level marijuana possession offenses to furthest extent possible under state law during a Jan. 23 meeting.  (Christopher Neely/Community Impact Newspaper)
Austin police chief doubles down: Cops will continue citing and, in some cases, arresting for pot possession despite City Council direction

The City Council decision does not change how the police department handles marijuana possession, according to the police chief.

Trudy's North Star, located at 8820 Burnet Road, Austin, was closed as of Friday afternoon, Jan. 24, with a sign on the door saying the restaurant would reopen Monday, Jan. 27. (Jack Flagler/Community Impact Newspaper)
Trudy's files for bankruptcy, owes employees more than $267,000 in unpaid wages

According to court documents, the Tex-Mex restaurant's financial issues started with its Dripping Springs location, which lost over $1 million per year.

Students at Lee Lewis Campbell Elementary Media and Performing Arts Institute in East Austin point to their classmate holding the red bag, whose artwork is featured on the new electric bus. (Amy Denney/Community Impact Newspaper)
Capital Metro sets ambitious goal to eventually replace all 423 buses with electric versions

Starting Jan. 26, riders can ride the new electric buses, which will rotate among routes.

(Christopher Neely/Community Impact Newspaper)
Council members divided over hire of outside attorney in property protest rights lawsuit

Some City Council members said taxpayer dollars should not be used to fight taxpayer interests.

While a new store is scheduled to open in South Austin this March, the H-E-B located at 600 W. William Cannon Drive, Austin, will close this spring. (Nicholas Cicale/Community Impact Newspaper)
South Austin H-E-B openings, closings and renovations expected in 2020

2020 is slated to be a year of major development for H-E-B in the South Austin area, with projects totaling $200 million.

Back to top