LEWISTON — In a traditional insurance company, clients buy insurance.

At Maine Community Health Options, they also run the place.

MCHO, based in Lewiston, is the state’s first health insurance co-op, a nonprofit governed for and by members. Think credit union — but for health insurance.

“The members we have may very well be tomorrow’s board directors,” CEO Kevin Lewis said. “That’s a nice perspective to have when we answer the phone.”

Formed last year, MCHO is one of 24 health insurance co-ops approved by the federal government in the wake of the Affordable Care Act. It is the only one in Maine.

If MCHO’s insurance plans are approved by the Maine Bureau of Insurance and the federal government, it is likely to be one of two companies in Maine listed on the Affordable Care Act’s upcoming health insurance exchange, or marketplace. MCHO also will offer insurance for individuals and small businesses off the exchange.

MCHO expects to release information about its plans and pricing later this summer. It will start enrolling members in the fall.

Insurance coverage will take effect Jan. 1, 2014.

MCHO formed in 2011, backed by the Maine Primary Care Association, which represents and supports community health centers. Lewis was CEO of the Maine Primary Care Association at the time. He and Robert Hillman, former CEO of MedNet, a Scarborough-based independent, physician-owned preferred provider organization, came up with MCHO.

“It goes back to the one observation that something had to change (in health care),” Lewis said. “Rather than continue to bemoan the absence of this critical piece, we recognize it’s necessary to sustain transformation and to fuel the transformation. (I said), ‘All right, let’s do that. Let’s step into that void.'”

Hillman is MCHO’s chief operating officer.

Although the Affordable Care Act allowed the formation of co-op insurance companies for the first time, MCHO had to apply to become one. It had to show regulators that, among other things, it had a detailed business plan and could provide patients with an adequate network of doctors and hospitals. It also had to prove that it would be able to sustain itself in the long run and find members to enroll. 

The Centers for Medicare and Medicaid Services has loaned billions of dollars to health insurance co-ops in an effort to get them off the ground and increase patient choice in health insurance. It loaned $62.1 million to MCHO, with $7.1 million earmarked for the co-op’s start-up, and $55 million for reserves and to show solvency for its state license. The smaller amount must be paid back within five years and the larger amount must be paid back within 15.

Lewis expects that won’t be a problem.

“We’ve been, I think, really good stewards of the money in setting up our operations for success,” he said.

MCHO is using the $7.1 million in start-up money to hire employees, lease office space and contract with third parties to deal with claims payments. The $55 million is held in reserve to ensure that it has enough money to pay claims and maintain coverage, should the new company falter.

The Bureau of Insurance regulates MCHO as any other insurer, though the federal government — because of the multimillion-dollar loan — holds it to a higher standard of solvency than does the state.

MCHO was licensed by the Maine Bureau of Insurance in 2012. This spring, it moved into its new home at the Bates Mill, above DaVinci’s Eatery. The co-op has 30 employees and is expected to have more than 40 by the end of the year.

A board of directors will set MCHO’s policies and will have the power to hire and fire the CEO. Co-op members will elect the board, and half of the board will be composed of co-op members.

It wasn’t yet clear exactly what MCHO’s insurance plans will look like, but Lewis said they will have a broad provider network, allowing patients to see all doctors and go to all Maine hospitals.

“I’ve got to think people will like that,” Lewis said.

Anthem Blue Cross and Blue Shield, the other insurance company that has applied to be part of the insurance exchange, has come under fire from Central Maine Healthcare in Lewiston for its plan to exclude some doctors and hospitals, including those that are part of Central Maine Healthcare: Central Maine Medical Center, Rumford Hospital and Bridgton Hospital.

MCHO hopes eventually to give preference to high-performing doctors, but it will take time for it to gather its own performance numbers.

MCHO also expects to offer financial incentives for members to get help early and to keep up with the care they need for chronic illnesses so they don’t end up in life-threatening emergencies that require more expensive care. And it plans to manage patient care to ensure members get the medical help they need when they need it.

“Given the heightened expectation of reduced re-hospitalizations and quality metrics that are being assigned to physicians, we certainly want to play our part,” Lewis said.

MCHO could release its insurance plan information, including rates and benefits, as soon as the end of July. With no established clients to draw on, the co-op will use traditional media, social media and its website to help educate the public about its plans.

Although MCHO will offer individual and group insurance on the exchange and off, Lewis expects most of its first members will be looking for individual insurance, some will be uninsured and many will come through the exchange.

Although it can be difficult to earn trust and win clients as a new insurance company, a market analysis shows a need for MCHO in the area, Lewis said. He believes people will be willing to join.

“We are committed to being here for the long haul,” he said.

ltice@sunjournal.com