Mass. state employee health insurer is out of money

The state agency that provides health care coverage to 460,000 public employees, retirees, and their families plans to delay paying claims to providers starting Monday because it’s running out of money — even as a measure to fund it is stalled on Beacon Hill.

Private insurers that administer plans for the agency, known as the Group Insurance Commission, have begun contacting health care providers to say the commission is projected to run out of money on Monday. As a result, the insurers will hold off on paying providers.

Point32Health, one of four private insurers that administer GIC coverage, sent an email to providers on Friday that Governor Maura Healey has filed a supplemental budget requesting $240 million for the GIC. The agency expects it will pass.

“However, the GIC does not know how soon the Legislature will pass the bill and when the GIC will receive the requested funds, which is why the GIC’s health plans are being asked to [delay] payment of members’ claims,” Point32Health said.

According to the letter, payments will be delayed until the state approves a budget or until July 1, when the new fiscal year starts and the agency receives more funding.

“It’s our hope that this will be resolved really quickly,” said Erika Scibelli, deputy executive director of the GIC. “We’re doing all of our advocacy and working with the legislature and our partners in the administration to advocate to get this moving.”

The funding delays dismayed officials at the Massachusetts Health & Hospital Association. In a statement, the industry group noted that the GIC announced as early as December that it had been over budget every month of the fiscal year. In February, the GIC then publicly stated it was spending approximately $20 million monthly above budgeted amounts.

“The GIC apparently does not have any other contingency plan to handle the problem that it has seen developing for at least the past five months,” MHA said in a statement. “The disruption in GIC claims payments will undoubtedly result in serious financial consequences for the hospitals and health systems that are providing care to the Commonwealth’s employees and retirees, and their dependents and survivors that are covered under the GIC umbrella.”

Though it provides insurance benefits to current and retired state employees and their families, the GIC doesn’t directly manage its benefits. Instead, it works with four insurers — Point32Health, Mass General Brigham Health Plan, Health New England and Wellpoint — to administer benefits. Providers send bills to the insurers, which then charge the GIC.

The governor had provided roughly level funding in this year’s budget for the Group Insurance Commission, said Matthew Murphy, a spokesperson for the Executive Office of Administration and Finance. But the numbers have since proven insufficient.

The agency has struggled in particular with surging prescriptions for pricey weight loss drugs, Scibelli said. Demands for reimbursement increases from providers have also exacerbated spending. Those challenges have pushed premiums higher for GIC members, up between 10.5 percent and 17.1 percent for next year, depending on the plan.

The governor’s supplemental budget was expected to fill the gap through the rest of this fiscal year, allocating $240 million to the GIC through June 30.

But the legislation has stalled on Beacon Hill, where lawmakers were already juggling a series of other bills that created a crush of major spending decisions.

Days after Healey filed her supplemental budget, for example, the House passed a $1.3 billion bill divvying up surplus revenue generated by the so-called millionaires tax. A week after that, the chamber’s Democratic leaders unveiled their $61 billion 2026 budget plan, which the House then added to and passed at the end of April. The Senate passed their version of the millionaires tax bill on Thursday, and plans to debate their annual state budget plan later this month. The Legislature also spent the first few weeks of their two-year session creating, and then negotiating, a separate spending bill designed to keep the state’s emergency shelter system afloat.

While the Legislature has had a lot on its plate, the funding delays come at a perilous time for the health care industry, noted Mike Sroczynski, executive vice president and general counsel for the MHA.

“While we appreciate the financial situation of the GIC, this directive is an unacceptable contingency plan to those challenges,” Sroczynski said. “We implore the GIC to seek an immediate, alternative resolution to its budget deficiency that will not further exacerbate the financial condition of healthcare providers.”

Matt Stout of the Globe Staff contributed reporting

Jonathan Saltzman can be reached at [email protected]. Jessica Bartlett can be reached at [email protected]. Follow her @ByJessBartlett.