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Boston Globe

Amid financial turmoil, Massachusetts insurer Commonwealth Care Alliance finds new owner

The acquisition is a dramatic about-face for a storied Massachusetts company, which has long served people simultaneously eligible for Medicaid — which serves mostly low-income people — and Medicare, which helps largely people over 65 and those with disabilities. For months, the organization Related : Advertisement Commonwealth Care had initially struggled to find a buyer, with the state going so far as to put out a Preitauer credited the state's involvement with helping streamline the process, helping with required approvals and providing 'risk mitigation.' 'The state's support is what really helped us to jump into a very quick process,' Preitauer said. That support included an agreement by the state to limit any of the insurer's potential losses for two years, according to the state's Department of Health and Human Services and its public insurance arm MassHealth. The agencies did not say how much MassHealth might spend to do so. Advertisement Additionally, if CareSource earns more than a 2 percent margin over the next two years, the funds would go to repay money MassHealth said it is owed from Commonwealth Care Alliance. 'Our team within the Healey-Driscoll Administration has worked tirelessly to avoid a disruption in health care services for Massachusetts residents, and we can all breathe a little more easily as we welcome mission-driven CareSource to our state,' said Kate Walsh, secretary of Health and Human Services, in a statement. The bulk of Commonwealth Care's insurance operations will be folded into the Ohio organization, including two Massachusetts primary care physician practices, a component Massachusetts regulators were All 1,682 of Commonwealth Care's employees will join CareSource, though it is unclear how many of those employees will have long-term jobs with the company. Preitauer said starting next week, senior leadership at Commonwealth Care will be meeting with CareSource to decide what the organization looks like moving forward. But the goal for members is to minimize disruption. 'Might some things change? Probably,' Preitauer said. 'We're not going to leave it exactly like it is, but we're not coming in with a big hatchet.' With the solvency issues resolved, the state's Medicaid program allowed the insurer to reopen enrollment for two of its products: one for disabled individuals under 65 called One Care and a product for low-income seniors, Senior Care Options. Under both plans, Medicaid and Medicare provide Commonwealth Care a set amount of monthly money per member, allowing the organization greater flexibility in funding care. Advertisement CEO Chris Palmieri steps down Commonwealth Care CEO Chris Palmieri resigned from the organization this week, as has the entirety of the board, though former board chair David Klein will stay on with Commonwealth Care's parent organization to wind down operations in other states, including selling two Michigan-based organizations that worked with physicians to coordinate health insurance and services. 'As we searched for a strategic partner, CCA prioritized finding an organization that shares our values, and would enhance care for those we are privileged to serve,' Klein said in a statement. 'CareSource is the ideal partner for the long-term sustainability of CCA, with decades of expertise in managing complex care and a unique member-centric focus.' It was unclear whether Palmieri Preitauer said the entirety of his company's $400 million investment was going to the assets it acquired, not to Commonwealth Care's parent company, and anything involving the former CEO's compensation had been settled prior to his company's acquisition. 'Whatever agreements he had with his board, that's not something that I saw or got involved with. That is outside of our scope,' Preitauer said. 'Whatever happened happened before we closed.' The acquisition adds to the more than 2 million members that CareSource manages in 13 states, largely focused on people with government insurance, including Medicaid, those dually eligible for Medicaid and Medicare and those who receive state subsidies but purchase insurance from state-based insurance markets. Advertisement To date, CareSource counts 4,700 employees. While some have suggested that Commonwealth Care's expansion contributed to its financial problems, Preitauer said expansion wouldn't be destabilizing for his organization. The organization has a track record of growth, and a technology platform that he said allows it to scale. Being a non-profit has also allowed the organization to invest in its platforms rather than paying out to shareholders, Preitauer said. 'We've been able to invest resources in ways that others cannot or won't,' Preitauer said. 'And the way we've invested has strengthened our capability, strengthened our depth and our reach in a way that I think will really help CCA too. If we do this right, CCA is going to deepen its mission and its legacy here in Massachusetts.' The acquisition and expansion comes amid federal uncertainty and turmoil over Medicaid reimbursement rates. Preitauer said while there may be some federal financial pressures, the organization didn't want to pass up this opportunity. CareSource's scale also is even more of a reason for Commonwealth Care to be brought under the umbrella, Preitauer said, as it strengthens the organization to weather any potential storms. As the organizations combine, Preitauer asked for members of the disability community and others to have patience, and he promised to deliver on the organization's mission of caring for vulnerable populations. 'We get how special it is. We're going to do a really good job. And we ask the stakeholders, give us a minute,' Preitauer said. 'We're looking forward to being able to earn that [trust] and to show where our hearts are. But we do have a lot of work ahead.' Advertisement Jessica Bartlett can be reached at