The struggling co-op had to find a way to get much needed capital.
New Mexico Health Connections, the nonprofit co-op insurance company formed under the Affordable Care Act, is selling its small group and commercial business to a for-profit company under a restructuring plan that will create a new insurance company that will be able to go after business the struggling nonprofit couldn’t.
The deal with the publicly traded Evolent Health, which was announced Wednesday morning, will lead to the formation of a new, for-profit insurance company in New Mexico called True Health New Mexico, Inc., which will be a wholly-owned subsidiary of Evolent Health.
The Washington, D.C.-based Evolent will acquire NMHC’s 22,000 commercial members. NMHC will continue to exist with a few employees and presumably continue to sell individual policies on the New Mexico Health Insurance Exchange. NMHC has 10,000 individual members through the insurance exchange.
NMHC CEO Dr. Martin Hickey will become the CEO of True Health and NMHC’s employees will become employees of the new firm.
Hickey told ABQ Free Press that the deal will allow the new firm to go after business that NMHC couldn’t, things like Medicare Advantage, federal employees and, eventually, Medicaid. It also gives the new firm capital reserves that NMHC didn’t have, he added.
NMHC is one of the four remaining 24 co-ops that were formed under the ACA. Twenty of those co-ops have gone out of business or been shut down by state regulators because of weak finances.
For insurance companies, the commercial lines of business – small and large groups – are generally profitable. It’s the individual policies, especially those sold through the health insurance exchanges, that have been big money losers in recent years.
The deal “allows us to get into [new] markets and brings the capital resources of a publicly traded company to us and allows us to vastly expand they synergies hat we have bought to managed care,” Hickey told ABQ Free Press.
It’s not clear whether the NMHC that remains will be able to continue selling individual policies on the insurance exchange. The company’s rates increased for 2018 policies.
The two firms said they hope the deal will be completed by the end of the year. The sale must be approved by New Mexico Insurance Superintendent John Franchini.
Franchini wasn’t immediately available for comment Wednesday morning.
Terms the deal weren’t disclosed.
Here’s the full text of the news release that NMHC and Evolent issued Wednesday:
ALBUQUERQUE, NM—New Mexico Health Connections (NMHC) announced today that it has signed an expanded partnership agreement with Evolent Health, a company providing an integrated, value-based care platform to the nation’s leading health systems and physician organizations. NMHC currently deploys Evolent’s Aldera platform for certain aspects of health plan administration.
The agreement between NMHC and Evolent is the result of a thorough search for a strategic partnership that benefits both organizations. Evolent expects to strengthen and expand its footprint in New Mexico, bringing together Evolent’s integrated operational, clinical and technology platform with NMHC’s physician network to support a value-based model of care throughout the state of New Mexico.
Under the terms of the agreement, Evolent will acquire assets from NMHC related to the small group, large group and ASO commercial business and establish a new entity, True Health New Mexico, Inc., a wholly-owned subsidiary of Evolent Health. The organizations anticipate that NMHC’s approximately 22,000 commercial members, provider network contracts, executive leadership team, and all NMHC employees will transition to True Health New Mexico as of December 31, 2017.
“This partnership with Evolent Health significantly positions our organization for growth,” said Martin Hickey, MD, CEO of NMHC. “NMHC was established to bring innovation to the healthcare marketplace and to challenge the status quo. While our structure will change, we will be able to expand our focus on providing high-quality medical management, caring customer service, and accessible, competitively-priced health plans for New Mexicans.”
“The ability to combine Evolent’s industry leading platform with a statewide organization that has a reputation for an integrated provider and consumer-centric approach represents an exciting opportunity,” said Evolent Health CEO, Frank Williams. “Building upon the success of our aligned partnerships in other states, we have the ability to leverage relationships with community providers and a world-class clinical and administrative infrastructure to deliver lower cost, higher quality health care for the residents of New Mexico.”
As an independent non-profit organization going forward, NMHC will solely focus on serving individual health plan members. NMHC will substantially strengthen its capital structure, ensuring that approximately 18,000 New Mexicans will continue to have access to individual healthcare coverage in the future. As part of this expanded relationship, True Health New Mexico expects to enter into an administrative services agreement with NMHC to support the NMHC ongoing individual business.
“Providers, employers and members will all benefit from the scale and infrastructure of a national partnership, while ensuring leadership and clinical decision-making are still driven locally,” said Hickey. “Evolent’s investment and expansion of services ensures the sustainability of a statewide, provider-led model. This translates into more choice and lower costs by empowering the local physician community.”
“We are particularly excited to have the current NMHC physician organization and leadership team remain at the helm in New Mexico,” said Williams. “They bring deep experience and a great track record of working collaboratively with physicians and hospitals to deliver high-quality care at an affordable price. This alignment provides us a unique opportunity to further enhance our capabilities while developing clear evidence of results.”
The transaction is subject to customary closing conditions which includes certain regulatory approvals, including approval by the New Mexico Office of Superintendent of Insurance (OSI).
About New Mexico Health Connections
New Mexico Health Connections is a physician-led health plan committed to keeping New Mexicans healthy. Started in 2012 as one of the original 24 CO-OPs created by the Affordable Care Act, NMHC is available on both the individual and small business health insurance exchanges through the commercial market. For more information, visit mynmhc.org.
About Evolent Health
Evolent Health partners with leading provider organizations to achieve superior clinical and financial results in value-based care. With a provider heritage and over 20 years of health plan administration experience, Evolent operates in more than 30 U.S. healthcare markets, actively managing care across Medicare, Medicaid, commercial, and self-funded adult and pediatric populations. With the experience to drive change, Evolent confidently stands by a commitment to achieve results. For more information, visit evolenthealth.com.
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