The modular multilevel converter (MMC) is one of the most favored topologies for medium and high voltage applications. However, the drawbacks, such as lots of capacitors and doubled number of devices, limit the power density. Recently proposed hybrid multilevel converters with high voltage switches and chain-links have shown the superior performance compared with the traditional MMC. Specifically, this article focuses on an emerging three-level hybrid modular multilevel converter, which can reduce half of submodule number. Based on the operating principle, a decoupling average model is derived to reveal the internal power relationship between the three-level stacks and chain-links. It can be proven the former plays a role to transfer a part of power from dc side to ac side directly. Therefore, the energy variation of chain-link is smaller, and the dc-link capacitance could be reduced. Besides, an improved trapezoidal arm current allocation is employed to solve the arm current distortion at the voltage zero-crossing point. In order to guarantee the arm current tracking performance, the variable sampling repetitive control based current loop designs are proposed. Finally, the experimental results of a 400-V prototype validates the proposed modeling and control methods.