Bright Health hasn't made full payment on its risk adjustment obligations to the federal government and is entering into a repayment plan with health insurance regulators.
The Bloomington-based company announced Tuesday that it will pay the balance owed — about $380 million — over the next 18 months, drawing on proceeds from an expected sale of its Medicare health plan business in California.
The agreement is Bright Health's latest financial maneuver to survive its exit from health insurance which was once its primary business that fueled rapid growth and then enormous losses.
As of last week, Bright Health had paid about $1.5 billion, or roughly 80%, of its risk adjustment obligation for 2022, but the full amount was due in mid-September, according to the federal Centers for Medicare & Medicaid Services (CMS).
"The principal amount of the repayment agreements is due in 18 months and bears interest at 11.5%," the company said Tuesday in a news release. "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."
Bright Health went public in June 2021, in the largest-ever initial public offering by a Minnesota company. Almost immediately, the company stumbled badly by wrongly estimating risk adjustment payments to the federal government and mishandling claims for its subscribers.
Following a year's worth of crippling losses, Bright Health told regulators in August 2022, there was "substantial doubt" it could continue as a going concern without raising more capital.
In October 2022, the company announced it would exit all 15 states where it sold health insurance policies to individuals — by far its largest business at the time.