Maryland Insurance Administration on Wednesday approved plans for Evergreen Health to be acquired by investors and convert to a for-profit insurance company.
Evergreen was one of 23 so-called consumer oriented and operated health plans created under the federal Affordable Care Act and one of the few still operating. In a bid to stay in busines amid mounting financial pressure, Evergreen sought investors to shore up its finances.
Approval from the insurance administration clears the way for Evergreen to finalize a deal with investors LifeBridge Health, Anne Arundel Health System and JARS Health Investments, a group of individual investors. Evergreen founder Dr. Peter Beilenson said he expects to close the deal with the investors in the coming weeks.
“It’s a long time coming,” Beilenson said. “It’s great to have some certainty.”
Beilenson, a former Baltimore City Health Commissioner who also served as the top health official in Howard County, founded Evergreen with a $65 million federal loan through the Affordable Care Act.
Most other co-ops created through the health law have closed or are in the process of winding down, unable to withstand the financial pressure of starting an insurance company coupled with the cost-sharing requirements of the Affordable Care Act.
Evergreen was hamstrung by the rule that required it to pay $24 million last year to insurers with sicker members, and sought investors to help keep the business afloat.
In January, the Centers for Medicare and Medicaid Services released Evergreen from the co-op program on the condition that it repay $3.2 million of its $65 million startup loan and forfeit $30 million it was due from another federal program.
Maryland Insurance Commissioner Al Redmer Jr. said in a statement that allowing the deal to proceed was in the public’s interest.
“This is a positive step forward for Evergreen Health, their 65 employees and the consumers they serve today and in the future,” Redmer said in a statement. “We expect the financial condition of the acquiring parties to ensure the company’s financial condition and protect the interests of its policyholders.”
Evergreen has about 24,000 members, all part of employer-sponsored health plans. The insurer was barred from selling individual health plans through the state’s online insurance exchange as it awaited a decision from regulators about its bid to convert to a for-profit insurer.
Evergreen plans to rejoin the exchange for 2018 coverage.
“We are confident that our partnership in Evergreen Health will prove to be a benefit for everybody involved, including the people of Maryland, who will continue to have an affordably priced, high-quality option when choosing an insurance carrier,” said Neil Meltzer, President and CEO of LifeBridge Health, in a statement.