Evergreen Health in tailspin after purchase group backs out
- The Maryland Insurance Administration has barred Evergreen Health from doing business in the state, following the collapse of a rescue plan for the beleaguered insurance carrier.
- Under an administrative order issued Thursday, Evergreen cannot make any future payments or transfers of assets, meaning it can’t continue to sell insurance on the Maryland health exchange.
- On Wednesday, a group of investors that had received regulatory approval to purchase Evergreen notified the company they were pulling out of the deal. One of those investors, JARS Health Investments, is still pursuing options, Baltimore Business Journal reports.
The Maryland insurance commissioner gave the green light for Evergreen to move to for-profit status just last month. The company, which has been seeking the shift since October, was to be acquired by Anne Arundel Health Systems, LifeBridge Health and JARS Health Investments. The acquisition and switch to for-profit status would have enabled the payer to remain in the Maryland Affordable Care Act (ACA) marketplace, where it currently covers about 25,000 people.
However, on Wednesday the investors said new financial information had raised concerns and they would not proceed with the deal.
The administrative order is a preliminary step to anticipated receivership, akin to bankruptcy. Thursday’s actions also mean Evergreen won’t be listed on Maryland’s exchange for the open enrollment period starting Nov. 1.
Insurance Commissioner Al Redmer, Jr., called the decision a difficult one. "The Maryland Insurance Administration took all possible steps to keep Evergreen in the market," he said in a statement. "Unfortunately, the company’s financially hazardous condition and the failure of the acquisition to close necessitated regulatory action on our part."
Evergreen was once a shining star among the 23 co-ops established under the ACA, but a $24.2 million bill from the federal government for the law’s controversial risk adjustment program left it looking for a lifeline. Before that, Evergreen had been on track to make a profit in 2016.
Last August, a U.S. appeals court ruled the company must make the payment despite its pending lawsuit against CMS challenging the program’s payment methodology. Two other co-ops, New Mexico Health Connections and Minuteman Health of Massachusetts, filed similar litigation in July 2016.
With its shaky financial status, Evergreen was dropped from Maryland’s 2017 individual insurance market, but had hoped to be back as a for-profit for 2018. Without a new set of investors, that won’t happen.
- Maryland Insurance Administration Maryland Insurance Administration Issues Administrative Order Regarding Financial Health of Evergreen Health
- Baltimore Business Journal Evergreen Health investors pull out of deal to create for-profit insurer
- Baltimore Business Journal Maryland regulators suspend Evergreen Health from market as investor seeks to save it