Maryland CO-OP barred from enrollment pending for-profit conversion decision

Evergreen Health, a Maryland consumer-operated and oriented plan (CO-OP), came up with a plan to avoid folding like the majority of the health insurance CO-OPs established under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), but that plan has hit a major logistical snag as it is currently banned from selling individual plans. The timing of its removal from the individual market could not be worse, as consumers must be enrolled in a plan by December 15 to ensure coverage starting on January 1, 2017.

Evergreen hoped to convert to for-profit insurer status through private investor acquisition, allowing it to gain enough funding to continue operations. Unfortunately, the plan requires CMS approval, which appears not to be coming through in time to allow 2017 sales. Maryland Insurance Commissioner Al Redmer, Jr had no choice but to pull the plug on Evergreen’s individual plan sales, announced December 8, but those enrolled in Evergreen plans now only have a matter of days to pick a new plan in order to maintain continuous coverage. Redmer admitted that he probably waited until “past the last minute” to announce the ban on sales.

Evergreen had about 6,000 enrollees through the state marketplace for the 2016 plan year, while an additional 3,000 people bought individual plans directly  from Evergreen. Most marketplace customers will be automatically switched to similar coverage under CareFirst BlueCross BlueShield or Kaiser Permanente, but may choose alternate plans. Cigna is the third insurer offering plans on the state’s exchange. Evergreen will continue to participate in the small and large group markets in Maryland.

This delay is yet another chapter in Evergreen’s story of issues with CMS. Evergreen expected to report a profit for 2016, a feat for a co-op, but was hit with a $24.2 million risk adjustment payment bill from CMS. In June 2016, Evergreen filed suit against CMS in an attempt to prevent collection of what amounted to 26 percent of its 2015 premium revenue. Evergreen took the position that the risk adjustment program, which reallocates money from insurers covering healthier patients to those covering the sickest population, favors larger insurers and puts smaller companies at risk. The U.S. Court of Appeals for the Fourth Circuit ruled that Evergreen was required to make its payment while the lawsuit was pending.

Evergreen CEO Dr. Peter Beilenson said that he expects an agreement to be finalized with CMS in the coming days. This agreement is likely to require Evergreen to pay part of its $65 million startup loan back to CMS in order to operate without such close agency oversight. Next, Evergreen would proceed through a long state process in order to facilitate the conversion, which Beilenson hopes to finalize in April or May 2017. In the meantime, Beilenson expects to grow the number of members in small and large employer groups from 29,000 to 40,000.