Under one roof: Narrow networks, and provider-owned insurers

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Summary: Very, very narrow networks are rising in popularity. These often seem to be formed by an incumbent insurance company (think Aetna or UnitedHealthcare) with a local health care system. This is an interesting phenomenon, especially given the statements by UnitedHealthcare that it’s not making enough money on the health insurance plans under the Affordable Care Act — and so is planning to pull out of some markets. At the same time, though, UHC is launching these smaller, narrower products in several markets. Another question raised by these small networks: What happens when the provider and the insurer are under the same roof, and the patient’s on the outside?

 


 

Here are a few examples:

“Arlington-based Texas Health Resources and Hartford, Conn.-based Aetna have partnered to offer fully-insured and self-insured commercial insurance products to employers and consumers in 14 counties in the Dallas-Forth Worth area. Aetna and THR expect the plans to be available Jan. 1, 2017, pending regulatory approval. Texas Health Resources CEO Barclay E. Berdan said this type of partnership is what is expected as the industry transitions to value-based care models.” Becker’s Hospital Review.

“Bright Health, a startup that hasn’t yet signed up its first customer, sees opportunity. The new health insurer, led by former UnitedHealth executive Bob Sheehy, picked Colorado as its initial state market. The Minneapolis-based company is pursuing an increasingly popular model, teaming up with one health system — Centura Health, in this case — to provide hospitals and doctors for its members.” The Denver Post.

“An independent subsidiary of Minnetonka-based UnitedHealthcare called Harken Health says it wants to sell coverage for next year in the Fort Lauderdale and Miami markets in south Florida. The moves follow a large pullback by UnitedHealthcare from exchanges that include Colorado, Florida and other states, in 2017. … ‘As we are independent companies, our decisions on markets are made autonomously,’ Tom Vanderheyden, the chief executive at Harken Health, said in an e-mail. Harken Health launched this year by selling coverage in Atlanta and Chicago. The policies include unlimited access to free primary care, plus certain health and wellness services, at a limited number of health centers that Harken operates. For 2017, Harken plans to add six new health centers in Chicago and two in Atlanta.” The Minneapolis Star-Tribune.

Provider-owned health plans

Other similar plays include North Shore LIJ-CareConnect in the New York area, in which the insurance product the hospital system sells on the New York State of Health exchange is severely limited to providers in the system. It likes to call itself the first provider-owned health plan in New York State.

Here’s more on provider-owned health plans: “Provider-owned health plans … continue to spring up or get larger as more hospitals and physician groups are moving to take on financial risk for their patients under value-based and capitated payment contracts. Providers see the financial and quality advantages of controlling premium dollars from beginning to end and steering patients toward their services. It frees them from having to share with insurance companies any savings they generate from improved quality and efficiency. ‘If you can demonstrate that you offer more quality at an effective price point, you can take (market) share,’ said Joseph Marinucci, a health insurance analyst at ratings agency Standard & Poor’s.

“But for every potential advantage of starting a health plan, there is an ‘equally robust list of cons,’ said Chris Myers, a director at consulting firm Navigant Healthcare. Once hospitals ‘get into product design and pricing and all of the nuanced areas, you can get into trouble reasonably quickly,’ said Greg Maddrey, a director at the Chartis Group, a consulting firm.”

[Update June 2, 2016: “Bon Secours Richmond Health System has entered the health insurance game,” The Richmond Times-Dispatch reports.

“The system recently launched its Bon Secours Value Network, a self-insured program for small- and medium-sized businesses in central Virginia.

“Self-funded plans are usually reserved for massive companies with hundreds of employees. Value Network makes such plans available to smaller companies with 10 to 100 employees. … Because Value Network is a self-insured plan, Bon Secours is not taking on the responsibilities of a traditional insurance company. Rather, companies pay for the costs of care and contract directly with Bon Secours — which offers resources to those companies such as its workforce wellness program and access to care providers at its 100 Richmond-area locations, including five hospitals.”]