Oscar will cut its network in half for 2017 and will no longer cover many of New York City's largest healthcare providers, the health insurer announced in a blog post on its website Tuesday.
The move signals a shift in corporate strategy to focus on a few large health systems, after initially using MagnaCare's network and offering its customers a broad array of hospitals and doctors.
In 2017, the health plan will cover 20,000 providers, about half as many as it does this year, according to the blog post by Mario Schlosser, Oscar's co-founder and chief executive. It will include 31 hospitals in its network, down from 77 in 2016. It has agreed to work with Mount Sinai Health System, Montefiore Health System and the Long Island Health Network, which includes 10 hospitals, Schlosser wrote in his post. The announcement was first reported by Vox on Tuesday.
Oscar has struggled financially in the first three years of the New York State of Health marketplace. In the first quarter of this year, it lost $38.7 million. For all of 2015 the insurer lost $92.4 million, according to filings with the National Association of Insurance Commissioners. Oscar had 64,294 members as of March 31.
"Our new network will not contain every hospital or doctor we have today, but this is a good and necessary change," Schlosser wrote. "Nevertheless, there will be some health care critics, entrenched in their views on an outdated system, who will say we are only changing our network to improve our bottom line."
Schlosser's explanation went on to emphasize improvements the insurer is making next year, such as extending to all members its "concierge" teams that provide care management services, and relaunching its doctor-on-call service. He explained that the system divided up the New York metro area into 350 "sub-neighborhoods" and ensured that Oscar had adequate coverage of each area.
"While understanding and predicting physician referral patterns and operating privileges is a highly complex problem, we are confident that we have constructed a network that will offer a streamlined experience for our members," he wrote.
As of March 31, Oscar removed from its network New York-Presbyterian hospitals and affiliates of the system, such as New York Methodist Hospital and New York Community Hospital in Brooklyn.
Then, on Monday night, other hospitals were informed of Oscar's plan to drastically shrink its network.
Northwell Health was told it would be excluded “even though we gave Oscar favorable prices and terms,” said Howard Gold, Northwell's executive vice president leading its managed-care business operations. “While Oscar claims to be 'innovative' and a 'market disrupter,' they have struggled to make their model work.”
Gold contrasted Oscar with the “seamless integration” offered by CareConnect, Northwell's provider-owned health plan. That insurer lost $31.8 million last year.
Niyum Gandhi, Mount Sinai's chief population health officer, said he believes consumers will be getting greater value in exchange for less choice. Mount Sinai, which will be Oscar's lone in-network health system in Manhattan, has been working closely with the insurer for about a year on projects that will make appointment scheduling and billing easier for patients.
“There are areas where we can make our industry's back-end garbage not the consumers' front-end problem,” he said.
The announcement had already begun to elicit a backlash from consumers Tuesday, as Oscar has proposed raising premiums 18.4% on average in the nine counties it serves, pending approval by the state Department of Financial Services, which frequently lowers insurers' proposed hikes. Meanwhile, consumers will have fewer options when choosing hospitals and doctors next year.
"Health insurer Oscar to halve its network next year" originally appeared in Crain's Chicago Business.