Noridian Healthcare Solutions has reached an agreement with the state of Maryland to pay $45 million for its leading role in a problem-plagued online health insurance exchange.
The agreement with Noridian, a subsidiary of Blue Cross Blue Shield of North Dakota, was announced this afternoon by Brian Frosh, the Maryland attorney general.
Maryland's health exchange, created for consumers to buy health coverage under the Affordable Care Act, crashed immediately after launching Oct. 1, 2013.
Terms of the agreement call for Noridian to pay $20 million upfront and the remaining $25 million balance in $5 million installments for five years.
Tim Huckle, the president and CEO of Blue Cross Blue Shield of North Dakota, said the agreement offers the best way forward for Noridian Mutual Insurance Co., or NMIC, the official name of the North Dakota Blues. He said the deal will not affect premium rates for Blue Cross Blue Shield members.
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"NMIC believes it is in the best interest of all parties to move forward with the settlement and firmly believes that its guarantee of NHS's financial commitment to the state of Maryland is in its members' best interests," Huckle said in a statement.
The agreement is subject to regulatory approval, including by the North Dakota Insurance Department.
That sum of the settlement represents a recovery of 61 percent of the total Maryland paid for creation of the exchange. Noridian Healthcare Solutions was the prime contractor for the project.
Tim McGraw, president and CEO of NHS, said the company can handle the payout.
"NHS is a financially stable company," he said in a statement. "Through negotiation, NHS was able to work out a payment schedule that allows payment over five years. This arrangement has been structured such that NHS can continue to meet all financial and operational obligations."
The North Dakota Blues, Huckle said in his statement, said the health insurer "continues to operate business as usual and remains a financially stable organization."
He added: "It's also important to note that a subsidiary's financial gain or loss does not impact the determination of rates for BCBSND. BCBSND's rate determinations are based on actuarial data that considers previous and anticipated utilization of health services for each line of business and are subject to review and approval by the North Dakota Insurance Department."
