Cone Health joins the ranks of health systems entering the insurance business as it begins to market its new Medicare Advantage plan this week.
The Greensboro, N.C.-based system, a two-hospital group whose flagship facility is 1,004-bed Moses H. Cone Memorial Hospital, submitted its application to the CMS in February. The Medicare Advantage product represents its first venture into the insurance market.
Cone Health can begin marketing and advertising the plan starting Thursday, and will start enrolling patients on Oct. 15. Coverage will begin Jan. 1.
The system is entering the insurance market through its partnership with North Texas Specialty Physicians, which already has an insurance business known as Care N' Care Insurance Company. The Medicare Advantage plan, HealthTeam Advantage, will operate as a joint venture between Cone Health and Care N' Care.
Terry Akin, Cone Health's president and CEO, described the entry as a small step into the insurance industry. He declined to comment on expected enrollment numbers, but said, “I don't think we're talking tens of thousands, or hundreds of thousands.”
Cone Health will offer the Advantage plan in the state's Alamance, Guilford, Randolph and Rockingham counties.
The move builds on the system's other forays into risk-based payments. Its accountable care organization, Triad Healthcare Network, is participating in the Medicare Shared Savings program. Triad saved $21.5 million in its first year, and earned 50% of that in shared savings, said Steve Neorr, president of HealthTeam Advantage.
Cone also has become bolder in assuming risk for costs and quality. It recently converted to full global capitated risk on a Humana contract and is interested in CMS' “next-generation” ACO model, which will require participants to take full “up and down” risk, Neorr noted. “This is really a natural evolution for us,” he said.
Cone is moving faster than some of its local competitors, who have said they're taking a wait-and-see approach. But the number of health systems wading into the insurance business is only expected to grow despite high startup costs, a report last week from Moody's Investors Service predicted.
The credit rating agency found that not-for-profit health systems with an insurance business had median operating margins of 3.7%, compared with 4.8% for similar systems without an insurance arm.
However, the potential for increased market share and new revenue streams—as well as the desire to gain population health-management expertise—will pull other providers into the insurance sector, Moody's said.