Rich Daly | September 25, 2015
PROVIDER-SPONSORED PLANS MAY FACE CHALLENGES AROUND COST AND PUBLIC AWARENESS, ACCORDING TO RECENT ANALYSES.
Sept. 25—One-quarter of the more than 90 new health plans added in public marketplaces in 2015 were provider-sponsored plans, according to a new analysis.
Other new additions among the 333 insurers selling plans in the Affordable Care Act (ACA) marketplaces in 2015 were 31 carriers that previously had focused on Medicaid plans, seven that had focused on other types of commercial insurance, and 32 CO-OPs or start-ups, according to a McKinsey and Company report.
The provider-led plans were cited among the new insurers expecting synergies with their existing businesses. Examples of benefits for provider-led plans were an expected reduction in uncompensated care and improved delivery of care. These plans may not face some of the challenges that have caused other insurers to struggle, such as difficulties building a provider network with competitive payment levels.
The new additions likely helped fuel the overall presence of provider-sponsored plans in ACA marketplaces, where they number about 100 in 21 marketplaces, according to a recent Avalere Health analysis.
The increasing interest of providers in launching ACA marketplace plans echoed their growing presence in Medicare Advantage (MA) plans. Fifty-four percent of insurers that started offering MA plans over the last four years were sponsored by a provider organization, according to Avalere.
Provider-backed health plans—along with CO-OPs—may help “fill the health plan competition gap” as larger insurers continue with an ongoing merger push, Clive Riddle, president of MCOL, a managed care publisher, wrote in a recent blog post.
“Provider-sponsored plans have always been around, but today’s environment is much more conducive for their long-term prospects: The growth in Medicaid that strengthens the prospects of regional provider-backed Medicaid plans; the proliferation of ACOs that can serve as health plan incubators; the emergence of value-based payment systems and clinical integration that nudge health systems closer towards the purchaser end of the spectrum,” Riddle wrote.
Challenges Identified
Among the challenges recently identified for provider-sponsored plans was that most people are unaware of provider-backed care and are unsure of whether it represents a potential alternative to their current coverage, according to a recent poll by consultant Valence Health. Specifically, a 44 percent plurality said they did not know whether receiving all of their healthcare services and insurance through a provider-sponsored health plan would provide them with more coordinated care.
However, 21 percent of respondents said they were very or somewhat likely to purchase a health insurance plan through their local hospital or health system, or one of the more than 120 provider-sponsored health plans that Valence identified as operating in 2015.
Valence concluded that it “appears more education about coordinated care is needed among consumers.”
Another challenge for provider-sponsored plans is their ability to compete with commercial insurers based on price, according to recent datareleased by HealthPocket, which provides consumers with plan information. HealthPocket compared the lowest premiums for provider-owned plans in ACA marketplaces to the premiums of non-provider-owned plans in 12 counties across the country that contained both types of plans. It found that the lowest-cost provider-owned silver plans in those counties were 12 percent more expensive overall than the cheapest silver plans not owned by providers.
Quality Provided
“With respect to provider-owned health plans, the lack of premium advantage does not call into question the value of the model altogether,” the HealthPocket authors wrote. “Provider-owned plans have a reputation for higher quality in the Medicare market.”
Provider-owned plans and integrated delivery networks have shown that they provide higher-quality care by accounting for most MA plans with five-star quality ratings, noted a blog post by Rick Pollack, president and CEO of the American Hospital Association.
“By providing a seamless continuum of care, hospitals and health systems with health plans are meeting the needs of the communities they serve, providing the best-quality care for the best value,” Pollack wrote.
Source: HFMA