When Congress was drafting the Affordable Care Act, some Democrats saw the CO-OP program as an alternative to a government-run public option program. (Photo: Thinkstock)

Managers of Evergreen Health, Maryland’s Consumer Operated and Oriented Plan carrier, hope to keep the carrier going by getting it out of the CO-OP program and into the hands of private investors.

Dr. Peter Beilenson, the chief executive officer of the nonprofit, member-owned company, said Monday that the private investors would convert the company to for-profit status.

Related: ACA: CCIIO Peers Into CO-OP Future

The Baltimore-based company is applying for permission from the Centers for Medicare & Medicaid Services (CMS) to proceed with the deal, as an alternative to shutting the carrier down.

Evergreen, one of the six surviving Affordable Care Act CO-OP program carriers, now provides coverage for about 38,000 people.

ACA drafters created the CO-OP program to bridge a gap between ACA supporters who wanted the federal government to offer a government-run “public option” health insurance program and supporters who hoped to solve U.S. health finance problems by increasing the level of competition in the commercial health insurance market.

The ACA program provided startup loans for nonprofit groups that wanted to start nonprofit CO-OP carriers.

Early on, CMS officials put tight limits on CO-OPs’ activities. CMS ruled, for example, that no established health insurer could invest in a CO-OP or have an executive on a CO-OP board, and that the member owners of a CO-OP could never sell a CO-OP to any other party. CMS also put strict limits on CO-OPs’ ability to use CMS startup loans on marketing.

The strict limits, fierce competition and sudden changes in ACA rules and programs, such as a “risk corridors” program that was supposed to reward ACA exchange plan issuers for keeping premiums as low as possible in 2014, 2015 and 2016, drove many of the CO-OPs out of business by the end of 2015 and put most of the remaining CO-OPs in a fragile state of health by this spring.

In June, CMS announced that Evergreen Health owed $24 million to the ACA risk-adjustment program, a program that’s supposed to shift cash from individual and small-group issuers with enrollees with low health risk scores to issuers with enrollees with high risk scores. 

Evergreen Health and other smaller, newer carriers have argued that the risk-adjustment program rules tend to favor larger, older carriers, by giving carriers with more information about the health of their enrollees an edge over carriers with less information.

Evergreen Health managers say they hope to take advantage of an interim regulation CMS posted in May. In the interim regulation, CMS said it would consider letting a CO-OP that is winding down its operations transfer assets to a for-profit entity.

Related:

Maryland approves small-group menu

3 surprises from the Senate PPACA CO-OP hearing

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