Last fall, Karen Ignagni took over as CEO of EmblemHealth—a financially troubled New York insurer with 3.2 million covered lives—after 22 years at the helm of America's Health Insurance Plans, one of the most powerful lobbying groups in Washington. Modern Healthcare insurance reporter Bob Herman recently spoke with Ignagni about the challenges she faces in her new position. This is an edited transcript.
Modern Healthcare: What's it like to lead a single health insurer instead of herding cats in Washington, D.C.?
Karen Ignagni: This plan has a storied past, a 75-year tradition and a very strong community focus. Without a doubt we are in a turnaround situation. As we chart our course for our turnaround, we also are creating an innovation story here.
MH: Why did you decide to leave AHIP? Did you foresee UnitedHealth Group and then later Aetna exiting the trade group?
Ignagni: I couldn't have foreseen it. … When I was called about this particular opportunity, I wanted to come here … because of the mission of this plan. This plan has been a mainstay for this community. We are a tri-state solution from Connecticut to all parts of New York, and we have a network in New Jersey. So we're uniquely situated to be a partner with employers, with unions, with the state and with the federal government in the context of Medicare Advantage. It was a wonderfully exciting challenge, and I like challenges.
MH: You're a member of AHIP. Do you speak often with Marilyn Tavenner, the new CEO?
Ignagni: I have this old-fashioned rule that I'm happy to let AHIP speak for AHIP. Marilyn is going to build her legacy and provide very strong leadership.
MH: Just recently the ratings agency A.M. Best placed EmblemHealth under review. What has been most responsible for the company's financial problems?
Ignagni: The first day I started here I did a town hall meeting for all of our employees and indicated with a great deal of specificity that we were officially in a turnaround situation. Based on the 2014 financials, that was not a secret. It was clear to me that we needed to move very actively and aggressively to address those issues, but also to talk about growth and the opportunity to build on a number of strengths that I saw here.
Best noted that in the last part of '15, which is the first quarter that I was involved in, the situation was different than it had been previously. The financials demonstrate that the strategies that we began to employ on Sept. 1 and beyond are beginning to work.
We are going to be looking at making sure that our infrastructure is as efficient and effective as it needs to be so that we can completely engineer our turnaround, and we can build on the value-based contracts that we have developed. We have been the market leader in value-based payments, and we have taken another leap in that direction. We're two-thirds value-based payment … and based on the partnerships that we are securing presently, we will increase that percentage quite substantially.
MH: Does that include ACOs, bundled payments and full capitation?
Ignagni: Accountable care organizations are definitely in scope for us. If they are upside arrangements only, that's not true value-based. Value-based means being in a position where you can share gains, share losses and share responsibility with your provider partners. As we've executed here at Emblem, we consider our clinicians and our hospitals our partners. We are doing risk transfer as opposed to simply the upside arrangements you see throughout the market today.
So when we talk about accountable care organizations, we mean the “A” part, the true accountability, and that means looking at risk transference and looking at risk-sharing. We have capitation agreements, so we've already engaged in full-risk agreements with certain provider partners.
We have and are in the process of executing bundles with providers that are not prepared to take full risk or a very high percentage of risk. Emblem, because it has had such a long tradition of care coordination, managing care and the ability to do data-mining, we have the technical support systems that our provider partners want and need to be able to exchange risk.