POMCO joins new market with health-reform CO-OP

SYRACUSE  —  POMCO Group’s involvement in a new type of health-benefit plan gives it a piece of an evolving market and a chance to help expand the availability of health insurance, according to the company’s senior executive vice president.

Syracuse–based POMCO will administer the benefits for the first Consumer Operated and Oriented Plan (CO-OP) in New York. CO-OPs are nonprofit health-insurance plans called for in every state under the 2010 Patient Protection and Affordable Care Act, the federal health-care reform law.

It’s a familiar role for POMCO, which specializes in administering benefits such as medical benefits, dental benefits, and disability benefits for self-funded health and risk-management plans. But the CO-OP is a new and still-changing client.

The New York CO-OP is scheduled to start accepting enrollment in the fall of 2013 and begin providing coverage at the start of 2014. It will aim to offer affordable health plans to individuals and small businesses.

“This is an opportunity for us to play in a whole new market and maybe do some good along the way,” says Donald Napier, POMCO’s senior executive vice president.

“It’s going to serve an underserved group of folks,” he says. “It’s [for] all individuals. It’s going to be the small groups that are looking for relief and an opportunity to purchase insurance where maybe they hadn’t been able to before.”

The New York CO-OP is being started with $174 million in no-interest and low-interest loans from the federal Centers for Medicare & Medicaid Services. Brooklyn–based Freelancers Union, a national nonprofit organization that serves independent workers and has 170,000 members, is sponsoring the CO-OP.

As the plan’s sponsor, Freelancers Union is responsible for helping to start the CO-OP. But the CO-OP will be a separate organization with its own CEO and board of directors.

Freelancers Union was also responsible for choosing POMCO to administer the CO-OP’s benefits. POMCO’s role is to act as the CO-OP’s infrastructure, Napier says.

“We basically administer all the services for them to run their own self-funded health plan,” he says.

For the time being, POMCO will center its attention on helping it put together a provider network, Napier says. That network will support the National Committee for Quality Assurance’s Patient-Centered Medical Home initiative, which is an attempt to improve primary care by organizing medical care around patients, coordinating that care between different providers, and tracking care over time.

“That’s going to be the focus of our energies until the product is ready,” Napier says. “The nuts and bolts of the transactional business are up. We do that every day.”

Freelancers Union and POMCO estimate the CO-OP will cover 100,000 people in New York within seven years. But it is too early to estimate how its addition to POMCO’s portfolio will affect the firm’s revenue, Napier says.

POMCO generated $51 million in administrative revenue in 2011. It is projecting revenue growth of 8 percent to 10 percent in 2012, according to Napier. The company managed the equivalent of more than $1 billion in premiums in 2011, he adds.

If the new CO-OP does insure the estimated 100,000 New Yorkers, POMCO Group could hire 100 new employees over the next seven years, Napier estimates. The firm has added 41 new positions in the last year. It has a total of 400 employees, with 340 in Syracuse.

The company will have room for new employees because it is in the process of expanding its headquarters at 2425 James St. in Syracuse, according to Napier. POMCO is adding a 20,000-square-foot, two-floor expansion to its existing 77,000-square-foot building.

The expansion is slated to be complete this fall, Napier says. Crews broke ground on the work in early 2012.

POMCO did not share cost estimates or sources of funding for the expansion. Syracuse–based Beken Contracting Services LLC is the project’s general contractor, and the Syracuse architect Robert Abbott is its architect.

Enlarging the headquarters is not a direct result of the new CO-OP business, Napier says.

“The building expansion was really linked toward growth in general,” he says. “[The CO-OP] is just another way to support it.”

Selecting POMCO

Freelancers Union selected POMCO to administer the CO-OP’s benefits in part because the Syracuse–based company understands the New York State medical community, according to Ann Boger, Freelancers Union’s COO.

“We were looking for partners that would have strong relationships to the local provider communities and have an understanding of the local market,” she says. “One of the goals of the CO-OP is to be able to serve a really wide group of members across the state. POMCO seemed to be a natural fit for that.”

Freelancers Union was not new to the health-insurance realm. It provides health insurance to over 23,000 of its members in the New York City area through a wholly owned subsidiary, Freelancers Insurance Company. 

The organization decided to sponsor the CO-OP because it wanted to help reshape the health-insurance landscape, Boger says.

“We’re trying to pull together our experience with our members and think about how you make a program that meets member and consumer needs,” he says. “We are looking for as many opportunities as possible to experiment and create change within the system.”

Freelancers Union is sponsoring two other CO-OPs in the United States — one in New Jersey and one in Oregon. Its New Jersey CO-OP is in line to receive $107 million in federal loans, and the one in Oregon is set to receive $59 million.

The plans are part of 10 that the federal government has approved to receive a total of $845 million in loans.