Health systems are increasingly jumping into the insurance space. Even though costly information technology and complicated actuarial predictions are large hurdles, organizations view health plans as the missing piece to the population health puzzle. If people in a hospital system's service area are willing to go to those providers for care, why not offer the coverage to pay for it and keep the healthcare dollar local?
“We think that a big part of that transformation is being able to integrate the financing and delivery of healthcare,” Roskelly said. “In order to do that, we have to be on the delivery and insurance side.”
Cone Health has been working to create its private Medicare product for about a year. North Texas Specialty Physicians, an independent physician practice in Fort Worth, has helped along the way because the group is already in the Medicare Advantage business, Roskelly said. North Texas Specialty has more than 10,000 Medicare Advantage beneficiaries, according to July data from the CMS.
Cone Health operates a Medicare accountable care organization called Triad Healthcare Network, which earned more than $10.5 million in shared savings in its first year. The early success of that ACO gave executives confidence that they could move to the more aggressive, capitated Medicare Advantage structure, in which the federal government pays private insurers lump sums for each member.
The ACO "proved to us that we could be more successful in a risk-based contract approach,” Roskelly said.
Other regional health systems are taking notice. Mission Health, a $1.4 billion hospital network based in Asheville, N.C., said it's premature to discuss anything specific. The system would prefer to build partnerships with established insurance companies instead of using money to build its own health plans.
“But that is not to say that we're ruling it out,” said Marc Malloy, Mission Health's senior vice president of health plan solutions. “We'll see what the next few months bring and then evaluate how and where to deploy our resources.”
Charlotte-based Carolinas HealthCare System, the largest system in the state with almost $5 billion in annual revenue (PDF), similarly has no immediate plans to build a commercial insurance business. Carolinas CEO Michael Tarwater said every healthcare market is different, and Cone Health's strategy can't be replicated everywhere.
But Carolinas is changing how it works with insurers. The system was the first in the state to create a narrow-network product with Blue Cross and Blue Shield of North Carolina, the state's dominant insurer. Carolinas is also participating in bundled payment programs with local employers, where Carolinas receives a fixed amount of money for certain cardiovascular procedures.
“We are participating in all of those (programs) as we go,” said Tarwater, who is retiring from Carolinas next June.
The next significant step for Carolinas is the development of a clinically integrated network, which is expected to go live later this year. Physicians are able to negotiate with payers in clinically integrated networks to get better rates, but they must build a clear plan of how they will improve quality outcomes and care management. If Carolinas decided to build an HMO or partner with an insurance company in the future, “our clinically integrated network would likely be the one to manage that process,” Tarwater said.
For Cone Health, the health insurance experiment will start out small. The health system expects to start enrolling Medicare members this fall, with coverage going into effect at the beginning of 2016.
“If we have covered lives in the thousands, we'd be very happy with that,” Roskelly said.
