Christopher Cheney | August 27, 2014
The Medicare Advantage program is emerging as an entry point for healthcare providers seeking to establish their own health plans, such as UNC Health Care and Catholic Healthcare Initiatives.
As healthcare providers across the country consider opening subsidiary health insurance plans, some of the early adopters view the Medicare Advantage program as an advantageous place to get started.
In combination with a population health management effort, UNC Health Care has launched a Medicare Advantage plan targeted at the residents of Wake County, NC. This week, Allen Daugird, MD, MBA, president of UNC Physicians Network and UNC Health Care’s chief value officer, told HealthLeaders that developing an MA health plan is a high-gain, low-risk opportunity for providers.
“Medicare was attractive because the annual cost of care is so high, and even a small percentage decrease in costs results in a large sum. However, we also realized the shortcomings of traditional Medicare as a vehicle for care and value, even with various shared savings programs, where any shared savings is very uncertain and very long in the future,” Daugird said.
“On the other hand, with Medicare Advantage, [the Centers for Medicare & Medicaid Services] provides a monthly payment up front, and it is severity-adjusted so that there is an incentive to take care of the sickest patients. Medicare Advantage HMOs can require assignment to a primary care home and a more narrow network of like-minded value providers,” he continued.
“Lastly, MA plans can offer covered benefits traditional Medicare cannot such as transportation, unrestricted home visits, exercise and nutrition classes… and these enhanced benefits can improve the health of seniors and often decrease the total cost of care.”
MA plans offer seniors a value-based healthcare delivery option to traditional, fee-for-service Medicare. Across the country, dozens of carriers administer MA plans, which have expanded sharply in recent years and provide health coverage to about 15 million seniors.
Daugird says UNC Health Care officials decided it would be essential to pair their MA plan with a population management effort.
“MA means taking on full financial risk. If there is no population health management, the cost of care required by the benefit structure can exceed the aggregate per-member-per-month CMS payment, resulting in huge financial losses,” he said. “This is a very costly segment of the American population, and it is fool-hardy to take on financial risk without a plan for effective population care management.”
‘The long haul’
Medicare Advantage is part of Catholic Healthcare Initiatives’ long-term strategy “to move into different models of care,” says Juan Serrano, senior VP of payer strategy and operations at the Englewood, CO-based health system.
CHI, which operates healthcare facilities in 17 states, has founded a wholly owned subsidiary, Prominence Health, to build a portfolio of health insurance products. The nonprofit health system has also acquired a pair of insurance carriers over the past two years: Soundpath Health Inc. in Washington and QualChoice in Arkansas.
Serrano says launching an MA plan in Washington and acquiring two health plan businesses has established a foundation for HCI to operate in the insurance sector of the healthcare industry. “We realized that we needed to develop the skills more traditionally found at health insurance companies.”
CHI determined Medicare Advantage would be a good fit for the health system’s early forays into the insurance market largely because it is an individual product, Serrano said.
Unlike the broad provider networks that are still relatively common in the group insurance market, CHI officials believe MA plans “could make a lot of sense when offered in a narrow network.” The MA plan the nonprofit is offering in Washington State is based on a narrow network model and “we align each of our MA patients with a primary care doctor in our network,” Serrano said.
With large commercial carriers dominating the group health insurance market, individual insurance is an area where healthcare providers can compete with established market players, he added. “We are leading with the individual products,” he said of HCI’s short-term health insurance strategy.
HCI is offering health plans in Washington State and Arkansas this year, and is expanding its insurance product offerings next year to Kentucky, Nebraska, Ohio, and Tennessee.
Picking the right partner
CHI and UNC Health Care each have key partners helping the healthcare providers learn how to operate health plans.
Serrano says CHI was drawn to acquire Soundpath Health and QualChoice in part because both health plans had provider roots. Two large physician organizations founded Soundpath and a consortium of health systems provided financial backing for QualChoice. “They have a culture of understanding the healthcare delivery side,” he said.
Daugird says UNC Health Care established a partnership with Alignment Healthcare to leverage the Irvine, CA-based company’s population management expertise.
Alignment Healthcare’s “leaders not only know what to do, but have proven they can execute, and have replicated their business and care model in multiple markets,” he said.
“They know how to work and align incentives with hospitals, physicians, payers, and, most importantly, seniors. They also have built very sophisticated and effective analytics to continuously risk stratify the senior populations they are accountable for and proactively manage the care of these frailest patients, often using resources traditional Medicare does not pay for.”
“In short,” Daugird said, “They know what they are doing. We don’t. And we want to learn from them. Because we are inexperienced, they are also taking on most of the financial risk in the beginning.”
Source: Health Leaders Media
http://www.healthleadersmedia.com/content/FIN-307856/MA-an-Insurance-Proving-Ground-for-Providers