First Medical Health Plan Goes Years Without Paying Providers and Cuts Services to Patients

A year ago, Dr. Edwin Portalatín Pérez, a pediatric orthopedic surgeon, stopped accepting First Medical. He said the insurer still owes him payment for services dating back to 2024. In western Puerto Rico, where the subspecialist has his office, there are only two pediatric orthopedic surgeons.

Portalatín Pérez said that years ago, when the insurer fell behind on reimbursements, it would pay him 30% to 50% of what it owed, “on the condition that they’d say, ‘please, don’t stop seeing patients.’” But, he said, “they went right back to the same pattern, until we got tired of it.” That is why, in 2025, he decided to stop accepting the plan altogether, both its private coverage and the government-sponsored version known as Plan Vital.

“Sometimes I make exceptions [and treat them] because I feel bad for the patients. Since I’m a subspecialist, when true emergencies come in, I say, well, nobody else can do it,” said the doctor, whose practice is in Aguadilla. Most of the time, he recommends that the patient be taken elsewhere.

Most are transferred to the Medical Center in Río Piedras because they are complex pediatric trauma cases that require specialized care, he said. But Portalatín Pérez acknowledged that transferring patients from western Puerto Rico to the San Juan metro area also creates logistical, financial and emotional strain for their families.

“Now they’re going to lose two, three or four days of work. If that patient needs surgery, follow-up care now must be in San Juan. That translates into lost wages and, given the economy in this island, it’s unfair to families and to the patient, when many times that patient could have access to me the very next day for follow-up near home, which reduces costs and suffering for the family,” the doctor said.

“I think the government has to do something and walk away from that insurer,” said the pediatric orthopedist, who accepts other insurers under Plan Vital because, he said, they do not have the same nonpayment problems.

For the past four years, First Medical Health Plan has struggled to pay doctors, laboratories and pharmacies, while the government agencies that regulate it — the Office of the Insurance Commissioner and the Puerto Rico Health Insurance Administration, known as ASES — have been unable to say whether they have taken action against the insurer or what consequences the situation has had for patients, an investigation by the Centro de Periodismo Investigativo (CPI) found.

The insurer is contracted to provide services to more than 250,000 Plan Vital patients. Vital is the Puerto Rico government health insurance program for 1.6 million low-income residents on the island. First Medical is also the health plan for 90,000 public employees. That amounts to 55% of the nearly 165,000 employees of central government agencies and municipalities. Including its private enrollees, First Medical has close to 420,000 members. The company reported $1.624 billion in premium revenue in 2025, and more than two-thirds of that income came from its contract with ASES.

The company canceled an interview arranged with the CPI to answer questions about the issue.

As doctors like Portalatín Pérez stop accepting the plan because of nonpayment, patients insured by First Medical are left scrambling to get medical care, especially from specialists. The CPI called a random sample of 40 specialists and dentists across Puerto Rico, and half said they do not accept any First Medical coverage. Of those who do accept the plan, half said they accept only its private plans, not Vital.

The company, whose president is Francisco J. Artau, laid off 50 employees in February from a workforce of 600. It is part of the Artau family’s health care conglomerate, which also owns Metro Pavía Health System, operator of 11 hospitals in Puerto Rico under the Pavía and Metropolitano brands. Metro Pavía also laid off staff last year and restructured part of its operations.

First Medical reported losses every year from 2021 through 2024, according to reports from the Office of the Insurance Commissioner. In its 2025 report, it posted a profit of $5.3 million — a minimal amount compared with the losses of between $26 million and $39 million it reported to the insurance commissioner for 2024. Both figures appear in the insurer’s most recent filing with the regulator. As of publication, neither the company nor the agency had explained the discrepancy. Adding to those concerns, First Medical reported $170.7 million in unpaid claims in 2025.

“The health insurance market has faced significant challenges in recent years, driven by sustained increases in medical, pharmaceutical and operating costs, a reality that has affected the entire industry,” César A. Ramírez Quiñones, vice president of operations at First Medical Health Plan Inc., said in a written statement.

Among the challenges facing the industry, he cited demographic trends and high drug costs.

Still, First Medical is the only one of the five major insurers operating in Puerto Rico to report losses for four consecutive years.

“At present, First Medical’s financial condition follows regulatory solvency requirements and maintains adequate capital levels. Likewise, the company continues to manage its operations on an ongoing and ordinary basis, guaranteeing compliance with its contractual and regulatory obligations,” Ramírez Quiñones said of the company’s current situation.

Asked by the CPI what was different about First Medical that led it to report losses four years in a row, he said: “Those years reflect the combined impact of different factors, such as changes in the risk profile of the covered population.” He also said it was due to “sustained increases in medical and pharmaceutical costs, post-pandemic adjustments in payment models, as well as operational and regulatory pressures specific to the local market.”

But those factors did not affect First Medical alone; they affected other insurers as well.

“First Medical had issues last year too, but its owners — it belongs to the Artau family — capitalized the company. And I would think that this year they’ll do the same, they’ll find the money they need to capitalize the company,” said attorney Iván Colón Pérez, an independent health services consultant and former president of the now-defunct Constellation Health plan. To capitalize a company is to inject it with its own funds to keep it operating.

Health Secretary Víctor Ramos Otero acknowledged to the CPI that First Medical is facing financial problems but said it is not insolvent. Meanwhile, ASES Executive Director Carlos Santiago Rosario could not explain why the plan has failed to pay claims, despite being required to maintain a reserve under its government contract. He referred questions to Insurance Commissioner Suzette M. Del Valle Lecároz, who declined to be interviewed by the CPI on the matter. She limited herself to sending written statements related to the layoffs and lawsuits seeking payment and alleging breach of contract against First Medical.

Health care providers under contract with First Medical told the CPI they are worried about the company’s future and the government’s inaction in ensuring the insurer’s financial stability or rehabilitation.

Extremely limited drug coverage

Linda Ayala Bousson, executive director of the Puerto Rico Community Pharmacy Association, said the formulary — the list of medications covered by First Medical — is “quite limited” and that “they don’t make exceptions.” That means even if a patient needs a specific medication, if it is not on the formulary, it is not approved.

She also said some pharmacies have had payment problems with the plan. In her view, that is because the insurer has not paid its pharmacy benefit manager, or PBM — in this case, Abarca — or because of some contractual issue between the two companies.

A pharmacy owner who requested anonymity for fear of retaliation said First Medical fell months behind on payments when ASES began covering medications under the Ryan White Part B/ADAP Program, which serves HIV-positive patients.

“The portion that came from — or should have come from — First Medical was severely delayed for months. I mean, I was getting payments from the others, from MMM, from Triple-S, those were coming in, but there was a portion of Abarca’s payments for the Vital health plan that I wasn’t receiving. And when we started digging and looking, we found it was the part that corresponded to First Medical,” the pharmacist said.

He also said the insurer’s formulary is very strict, many medications are excluded, and the price a patient pays for a drug depends heavily on a discount card tied to the health plan, which forces the pharmacy to discount many of those medications.

Ayala Bousson echoed those concerns. She also noted that the First Medical/Abarca plan is used by most public employees, who are working middle-class people, yet it offers limited prescription drug benefits to its members.

She cited the case of a patient who had spent seven years using a cardiovascular medication, but recently First Medical stopped covering it. The patient had to switch to a new medication, even though the original one had worked well.

“What’s the problem? That patient was already hospitalized and at one point was given a medication other than Entresto [for heart failure], and decompensated while in the hospital, and First Medical refuses to make an exception and give the patient that medication, which [suddenly] is no longer on the formulary. But this patient, with First Medical, has been using it for the condition for more than seven years,” Ayala Bousson said of a drug that costs the pharmacy about $690 and would cost the patient about $870 a month if paid out of pocket.

The CPI requested an interview with Abarca, but the company did not respond.

Emilio Nieves Torres, president of the Central Puertorriqueña de Trabajadores labor union, also told the CPI he has received complaints, particularly from teachers who have struggled to access certain doctors because those physicians no longer accept First Medical. He also said public employees are uncertain about the insurer’s future.

First Medical’s vice president of operations did not respond to the pharmacies’ specific allegations. He limited himself to saying that the plan’s handling of medications responds to “clinical trends,” is “consistent with market best practices,” and complies with state and federal regulations. In the case of Plan Vital coverage, he said it follows the ASES formularies.

ASES avoids answering questions about finances, providers and fines

ASES did not answer the CPI’s questions about the status of payments to providers, nor did it specify how many providers are in the insurer’s network for Plan Vital.

“We have different monitoring systems, but those are processes currently underway and the information is not available for disclosure,” Santiago Rosario said in an interview with the CPI.

“When it comes to First Medical’s financial condition, the entity that by law oversees whether they are complying with having the required  (funds) reserve and all of that, is the Office of the Insurance Commissioner, not us. What we request for our processes are the certifications issued by the insurance commissioner,” he said.

In other words, although ASES awards annual contracts worth nearly $5 billion in public funds to insurers serving Plan Vital patients and has a duty to ensure compliance with contracted services, the agency does not monitor whether insurers maintain the financial solvency needed to guarantee those services, according to Santiago Rosario’s explanation.

Colón Pérez said that although First Medical has reported losses in recent years, it still has the financial strength needed to operate.

“I wouldn’t want First Medical to disappear. Right now, First Medical is the company with the lowest premiums. It is an insurance alternative for public employees who are not willing to pay $300 for coverage, so they go with First Medical for $150 coverage,” Colón Pérez said.

ASES director: ‘They have the option of going to another plan’

The ASES executive director also contended that disclosing the number of providers in First Medical’s network is unnecessary. In his view, that information is an internal company matter and does not affect Plan Vital clients, who remain free to switch insurers if their current coverage does not meet their needs. The official disclaimed responsibility for the composition of the provider network, even though the contracts his agency awards to Vital insurers set minimum provider requirements. Neither the agency nor the company provided CPI information on the network’s composition.

Provider networks are the doctors, specialists, hospitals and laboratories that insurers contract to deliver health care services to their patients.

“Medicaid beneficiaries have the option of going to other plans,” the ASES executive director said when asked what remedy patients have if they face coverage problems with their insurer.

He said a patient can switch insurers even after the deadline has expired if the change is prompted by a provider’s decision to stop accepting their health plan.

The ASES chief insisted that the party that loses in that process is not the patient, but the insurer that lost the client.

First Medical’s vice president of operations did not answer the CPI’s question about whether the insurer’s number of providers has declined. He said only that “provider networks are dynamic by nature and may fluctuate for multiple reasons, including individual decisions made by providers themselves.”

He said that “First Medical maintains a network that complies with access, adequacy and continuity of service requirements,” and that regulators evaluate the network to ensure the insurer has the primary care doctors and specialists needed for the population it serves and that it meets required time-and-distance standards. Those regulators are the Office of the Insurance Commissioner and ASES.

He said First Medical has more than 10,000 contracted providers and more than 14,000 service points. Of those 10,000 providers, 4,720 are specialists or subspecialists.

Although Santiago Rosario repeatedly refused to answer questions about First Medical’s fiscal health and referred them to the insurance commissioner, he said ASES has a compliance division where the insurer must report metrics, including payment to providers of 95% of all clean claims within no more than 30 days, as required by the agency’s contract. Insurers also must comply with Act 138 of 2020, which requires payment to providers within 30 days.

“The compliance unit reviews and audits these matters, and if it concludes there was noncompliance, then a fine is imposed,” he added. Noncompliance becomes public only after the insurer has gone through the administrative process and a final resolution has been issued, he said.

Santiago Rosario said that since he arrived at the agency in July 2025, he has not signed off on any fines against First Medical.

Former ASES Director Roxanna Rosario Serrano told the CPI that she issued two fines against First Medical for failing to pay providers before leaving the post at the end of 2024. However, First Medical told the CPI that those fines “are ongoing,” and the current ASES chief did not answer questions about their status. So, it remains unclear whether the company ever paid them.

“During my administration at ASES, and until my departure on Dec. 31, 2024, I fully complied with my responsibility to carry out compliance oversight processes regarding First Medical Health Plan’s payment to providers, including monitoring corrective actions and imposing administrative fines, as established by the contract and federal program regulation,” Rosario Serrano said.

The ASES director said that before carrying out the layoffs last February, First Medical notified the agency that it would dismiss 50 employees. ASES requested a report detailing the measures the company would take to ensure the layoffs would not affect services for Plan Vital beneficiaries.

The CPI requested that report from ASES, but as of publication, the agency had not provided it.

“They complied with that, we met, and so far, it has been monitored from the compliance standpoint, and we have not seen it have any impact on services to beneficiaries,” Santiago Rosario said.

Frustration among doctors

Carlos Díaz Vélez, president of the Puerto Rico College of Physicians and Surgeons, said the problems First Medical has faced in recent years left many doctors frustrated and angry because they were paid late.

“That has caused a lot of demoralization and a lot of reluctance to accept the plan,” the cardiologist said, adding that fewer providers have accepted First Medical over the years. Still, he said he has not received information indicating that the company is currently failing to pay doctors on time.

A dermatologist in the Arecibo region, who asked not to be named, said he does not accept First Medical because of problems he experienced with the insurer. At the time, he said, he did not receive full payment, only partial payments.

Likewise, a subspecialist in western Puerto Rico, who also asked not to be identified, told the CPI that because of the nonpayment problems during the previous four-year government administration, he no longer accepts the plan.

Laboratories also face payment delays

In addition to doctors and pharmacies, clinical laboratories have been affected by First Medical’s nonpayment problems.

Felipe Cintrón Zayas, president of the Puerto Rico Clinical Laboratories Association, expressed concern that First Medical could go bankrupt and fail to pay the money it owes them.

Cintrón Zayas said the layoff of 50 First Medical employees in February caused “serious concern.”

“We are very worried that this will keep dragging on, because then if there’s a possible bankruptcy filing, what happens to those laboratories?” he asked.

He said that last year, after the association filed a complaint with the insurer, it met with First Medical because payments at the time were running as much as five months late, not only under Plan Vital but also in their commercial line of business.

“After that meeting, there were one or two payments to reduce the amount of time they were behind, but we’ve seen that they’ve fallen behind again,” Cintrón Zayas said.

At the time, the association raised concerns about nonpayment issues with the Office of the Insurance Commissioner and ASES.

He added that some laboratories stopped accepting the plan at the time, a situation that could happen again, “because things don’t look good with this plan.”

“We don’t understand, for example, in Vital’s case, how there can be nonpayment because there is a Prompt Payment Act — they have to pay at least 95% of invoices within 30 days — although we’ve seen and denounced this to the Office of the Commissioner and in other forums that this law is dead letter,” he said.

According to ASES, the agency is making the corresponding payments to First Medical.

In the case of nonpayment under the commercial or private plan, Cintrón Zayas said he also can’t understand the delays, because these are patients with active coverage, meaning they pay the company in advance.

The CPI learned that First Medical owes more than $80,000 to a chain of laboratories in western Puerto Rico dating back to 2025.

First Medical Health Plan’s vice president of operations did not directly answer why providers are currently experiencing payment delays.

“In the past, and as was publicly known, the organization faced challenges associated with claim reconciliation and adjudication processes, which have been addressed in coordination with ASES. At present, First Medical remains in close communication with that agency, which can be verified, and continues to work actively to comply with payment metrics.”

Layoffs raise alarms

“They [First Medical management] have always said they are looking for a way to inject funds and rehabilitate the plan, but we don’t have specific details [about that rehabilitation],” said the health secretary.

Asked about the reasons the insurer gave to justify the layoffs, Ramos Otero acknowledged that it “has economic problems. They are not at the level of insolvency. I know for a fact that the insurance commissioner is constantly monitoring how First Medical is doing. It is not at the level of insolvency, but obviously it is not at the numbers it should be.”

“The Office of the Insurance Commissioner has been attentive to the situation related to First Medical and to recent public reports. We are in ongoing and regular communication with the organization, including its senior management, to evaluate any possible impact on policyholders and on the entity’s operational stability,” the insurance commissioner said in a written statement.

In addition to the layoffs this year, First Medical was sued by medical equipment company Boston Scientific del Caribe Inc. for breach of contract.

“As for the lawsuits filed by providers, because they involve matters that are or have been before the courts, the Office of the Insurance Commissioner will not comment on the merits of litigation. Nonetheless, we have formally required information from the organization to evaluate any possible effect on continuity of services and compliance with its contractual and regulatory obligations,” Commissioner Del Valle Lecároz said.

Journalist Amanda Pérez Pintado contributed to this story.

This translation was generated with the assistance of AI and reviewed by our editorial team to ensure accuracy and clarity.