Clover Health got $425 million to disrupt health insurance — but so far it’s upset customers and missed its numbers

By: Christina Farr

In the summer of 2015, senior citizens who had signed up for a fledgling insurance plan called Clover Health started receiving unexpected medical bills for blood work.

Most were living on fixed incomes in New Jersey, the only state where Clover, a venture-backed start-up based in San Francisco, was available.

As a Medicare Advantage Plan, Clover makes most of its money from the federal government, which covers the bulk of insurance costs for people age 65 and over. Members expected the Clover plan to cover clinical lab tests, even if the providers were out of network.

But Clover was playing a different game — one which would put patients in a bad situation. Before Clover would make payments, it first wanted patient data from the country’s biggest lab-testing providers, LabCorp and Quest Diagnostics, according to two people familiar with the matter who asked not to be named because the information they provided was confidential.

That data would help Clover develop the predictive analytics technology that was supposed to help patients and keep costs down — and was a big reason why venture capitalists plowed $425 million into the company. Read more…