Fletcher Allen, a Vermont university hospital and medical center, serves all of
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Vermont Managed Care to Work with New Vermont Insurance Company
The Vermont Health CO-OP
Contact: Mitch Fleischer
Phone: (802) 657-4744
www.chcvt.coop
Press Release
South Burlington, June 22, 2012: Today the US Department of Health and Human Services (HHS) announced the award of $33,837,800 million in loans to the Consumer Health Coalition of Vermont (“Vermont Health CO-OP”) for the creation of a new non-profit health insurer in Vermont. Unlike Vermont’s current health insurers, the Vermont Health CO-OP will be entirely member-owned and governed. Of the loan award, $6,289,400 is allocated for “start-up” and $27,548,400 for cash reserves (“solvency fund”).
“We’re excited to be part of a national movement of member-owned and governed health plans. We believe the Vermont Health CO-OP will play an important role in health care reform and is a perfect fit for Vermont’s culture and rich heritage of cooperative endeavors,” said Mitchell Fleischer, Chair of the founding Board of Directors.
The Affordable Care Act (ACA) charged HHS with designating at least one CO-OP in each state, which will provide a selection of innovative health plan options for the state’s Health Insurance Exchange, slated to begin operation in January 2014. The federal loan to Vermont Health CO-OP will provide funding for the 18-month start-up period for the new non-profit company, as well as the solvency fund required by the Vermont Department of Financial Regulation for licensed health insurers. The loan agreements with HHS require payback of the start-up loan within five years, and the solvency loan within 15 years.
The ACA requires these new health plans to be non-profit corporations, with direct election of the board by the individuals covered by the CO-OP’s health plans. The ACA also requires that any financial gains realized by the CO-OPs must be used exclusively on behalf of members and to re-pay the loans from the federal government.
The Vermont Health CO-OP is incorporated in Vermont and will apply for an insurance license immediately. It will begin marketing products by October 2013. CO-OP health plans will be available statewide to individuals and small groups through the Vermont Health Insurance Exchange starting January 1, 2014. The CO-OP also anticipates offering plans outside of the Exchange to larger employers as well.
The founding board includes individuals with extensive experience in health insurance, regulation, and health care delivery, including CEOs of successful Vermont start-up ventures.
Under the bylaws of the CO-OP, and as required by federal law, within two years of the issuance of the first insurance policies, the founding board will be replaced by an operational board directly elected by the members.
The Vermont CO-OP will work with Vermont Managed Care to coordinate the delivery of health services through its growing network of hospitals, physicians, patient-centered medical homes, and other health care providers throughout the state of Vermont.
“We will be working closely with the Vermont Health CO-OP to implement the types of delivery systems and payment reforms envisioned in Vermont’s Health care reform efforts,” said John Brumsted, president and chief executive officer, Fletcher Allen Health Care, which wholly owns Vermont Managed Care. “We’re excited to have a partner whose foremost goal is to strengthen the patient-physician relationship, and who is eager to innovate with us in the new health care reform environment.”
Todd Moore, president of Vermont Managed Care said “We believe the Vermont Health CO-OP strongly aligns with our vision of the future, where provider-based organizations assume financial accountability for the medical cost and quality outcomes for a population. We anticipate strong relationships with payers in our market area who see value in this type of payer-provider partnership, and are confident that the Vermont Health CO-OP will be a leader in applying this model.
Founding Board member James Lampman, President of Lake Champlain Chocolates, noted that the mission and governance of the Vermont Health CO-OP differentiates it in important respects from other health insurers. “The CO-OP will be a democratically operated health insurance company. Its only purpose is to serve its members. All of the founding Board members are dedicated to establishing a corporate culture centered on that goal. The CO-OP will focus on our Members’ health improvement and will operate with full transparency.”
As part of the rigorous application and selection process established by HHS, the CO-OP was required to present comprehensive feasibility and actuarial studies and a business plan. Moreover, the CO-OP is required to meet a series of strict operational milestones in order to continue to draw down the federal loan funds. The CO-OP is subject to oversight by the Vermont Department of Financial Regulation and the federal Department for Health and Human Services until the loan funds are fully repaid.
