Rocky Mountain Health Plans, a dominant and long-independent provider of health insurance coverage in western Colorado, has struck a deal to join UnitedHealthcare, the largest health insurer in the state and the country.
“The value of this union is that you take United’s state-of-the-art technology and the extraordinary community relationships of Rocky,” said Steve ErkenBrack, president and CEO of Grand Junction-based Rocky Mountain Health Plans.
UnitedHealthcare said it will invest an undisclosed amount in RMHP to “restore the organization’s capital base and help ensure that it becomes a stronger, more sustainable health plan over the long term.”
In return, UnitedHealthcare will gain entrance to the state’s Medicaid market and access to 300,000 mostly rural customers in parts of the state where it currently lacks a reach.
“We don’t have a huge presence on the Western Slope. The two organizations are complementary in nature,” said UnitedHealthcare spokesman Will Shanley.
As a not-for-profit, RMHP will need to convert to a for-profit and then sell the stock it issues to UnitedHealthcare. Proceeds from the sale will go to the Rocky Mountain Health Plans Foundation to improve health care access in the region. A similar arrangement transpired when SCL Health System took control of three Exempla hospitals in Colorado.
“The foundation would be infused with a significant amount of dollars,” ErkenBrack said.
A value for the acquisition wasn’t disclosed, but it will be based on a fair-market price. As part of the deal, RMHP will continue to operate as its own brand, maintain its existing healthcare provider agreements, and retain its current management team and base in Grand Junction.
ErkenBrack said the two insurers share a commitment to provide multiple product lines that go beyond commercial policies, have experience working with independent physician groups and are recognized for innovation.
Rising rural healthcare costs have vexed insurers and weighed heavily on consumers, with residents of Colorado’s mountain counties paying some of the highest individual premiums in the country.
RMHP said last month it would drop five of the six plans it offered on Connect for Health Colorado, the state’s health insurance marketplace, because they weren’t covering costs. One plan had costs double the premiums collected.
Starting in 2017, RMHP will serve only Mesa County residents through the insurance exchange, leaving thousands of its current customers having to look elsewhere.
Anthem Blue Cross Blue Shield will be the only exchange plan provider serving the Western Slope outside Mesa County, where a cooperative model among healthcare providers has allowed RMHP to better contain costs.
UnitedHealthcare and Humana Insurance also announced they would stop offering individual insurance exchange plans in Colorado and several other states, part of a larger trend of providers dropping out of Affordable Care Act exchanges.
RMHP, which got its start in 1974, counts nearly 300,000 members, 19,000 affiliated health care providers and about 500 employees. UnitedHealthcare has nearly 1.2 million members in the state and is a subsidiary of UnitedHealth Group, which is based in Minnetonka, Minn.
The deal is expected to close by year end pending regulatory approvals from the Colorado Division of Insurance and the Colorado Attorney General.
“At this point, we have not received the filings which will trigger our review of the proposal. When we do, we will begin our review and investigation, including a public hearing, before we make a final determination on whether to allow this action,” the Colorado Division of Insurance said in a statement.
