Advocate Aurora Health could acquire as much as a 20% stake in Sauk City-based Quartz Health Plan Corp. and its affiliated holding company as the two organizations plan to launch a Medicare Advantage plan in eastern Wisconsin.
As part of the organizations' Medicare Advantage collaboration announced earlier this year, Advocate Aurora
will pay $5 million to acquire 1
5-20% of membership rights in Quartz Health Plan Corp. – the Quartz entity that sells Medicare Advantage plans.
But the Milwaukee- and Downers Grove, Illinois-based health system could also invest in Quartz Holding Company, an entity that owns other parts of the health insurance company, in a larger three-step transaction, according to plans filed with the Wisconsin Office of Commissioner of Insurance.
Advocate Aurora representatives say
the health system continues to consider options to increase its investment in Quartz, including buying more shares or holding a board seat.
Recently unredacted portions of documents filed with OCI outline what those investments could look like.
According to the plan, following its initial acquisition of 15-20% of the health plan in phase 1, Advocate Aurora could make two additional investments in Quartz Holding Company, which owns Quartz Health Insurance Corp. and Quartz Health Solutions, Inc.
The health system would have the option to acquire a 10% stake in Quartz Holding Company in phase 2, and could then increase that investment in the holding company to 20% in phase 3. OCI documents do not specify how much those investments would cost.
The Quartz brand is an umbrella for four provider-sponsored health insurance plans, including Quartz Health Plan Corp., Quartz Health Plan MN Corp., Quartz Health Benefit Plans Corp. and Quartz Health Insurance Corp. It also provides third-party administrator services for self-funded health benefit programs.
Quartz emerged in 2017 as the result of mergers
of health plans owned by Gundersen Health System, University Health Care, Inc. (UW Health) and UnityPoint Health-Meriter. Quartz has more than 340,000 people in its health plans in southern and western Wisconsin, parts of Illinois, Iowa and Minnesota.
With Advocate Aurora’s acquisition of a stake in Quartz Health Plan Corp., the ownership breakdown is now: Advocate Aurora, 15%; UW Health, 52.26%; Gundersen, 17.42%; and UnityPoint Health-Meriter,15.32%.
That stake allows Advocate Aurora to develop the new Medicare Advantage product and determine which health care providers will be included in the network and what the reimbursement levels for the plan will be. It does not give the health system power to appoint or designate a member of Quartz’s board. In its analysis and recommendation for approval, OCI said the transaction would “not create a monopoly or substantially lessen competition in any type or line of insurance in Wisconsin.”
Quartz and Aurora announced this week they will begin offering the new Medicare Advantage plan for seniors in eastern Wisconsin in January 2021. Open enrollment for the plan begins Oct. 15.
Advocate Aurora’s option to increase its investment in Quartz under phase 2 and 3 of the deal has raised questions as to whether the organizations will partner beyond the scope of the Medicare Advantage plan.
Rick Klein, chief business development officer for Advocate Aurora, said in July the health system will “consider options” to grow its partnership with Quartz. A spokesperson this week said the health system continues to consider its options. Quartz could not be reached for comment.
“Anything in the contract beyond Medicare Advantage is an option, not a commitment,” Klein said in July. “Our focus remains on Medicare Advantage and driving more value for the people and communities we serve.”
After phase 2, Advocate Aurora would own 15% of Quartz Health Plan Corp. and 10% of Quartz Holding company, according to OCI documents. After phase 3, Advocate Aurora would own 20% of Quartz Health Plan Corp. and 20% of the holding company. Those changes in ownership would require additional approval by OCI.
It’s unclear what the increased investment in Quartz would mean for Advocate Aurora; OCI documents say the membership agreements in phase 2 and 3 would “provide Aurora Health Care, Inc. with certain management and consent rights with respect to Quartz Health Plan Corporation and Quartz Holding Company and their respective subsidiaries.”
