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Blurring The Line Between Health Systems and Insurance Carriers

As tensions mount over physician reimbursement rates and health systems and insurance carriers seek ways to improve performance to secure higher payments for themselves, more health systems are looking to the unique solution of becoming an insurance carrier in their own right. A number of large regional health systems like Sutter Health and Stanford Health Care have ventured into the individual health and Medicare Advantage markets, and others seem poised to follow suit. So why do health systems want to take on this challenge?

More control means higher star ratings – Star ratings issued by CMS have been an important measure of plan quality and performance for several years, and the expansion of the program to include hospitals and long term care facilities shows that the ratings are here to stay. Star ratings aren’t just a feather in the cap, they afford special privileges like the ability to accept new members outside of the normal enrollment periods and higher reimbursement rates. The success of Kaiser’s Senior Advantage products has proven that having control of the entire process – including providers, pharmacies, and hospitals – is one of the best ways to ensure the kind of efficiency and well-coordinated care that leads to five star ratings. Other large health systems that already have the provider and hospital infrastructure want to leverage their own networks to achieve similar results.

Patients want stable networks – One of the most frequent complaints from consumers is that their carrier’s network changes from year to year, and they have no choice but to change carriers to follow their doctor. Network stability is in fact a frequent topic in discussions of Medicare Advantage reform and regulation. Large health systems who already have affiliated doctors likely see lower turnover rates amongst their providers and can remove some of that stress for their patients, especially in the wake of high profile contract disputes like the protracted negotiations between Sutter Health and Blue Shield.

Patients have relationships with their doctors, not their insurance carrier – As long as claims get paid, very often clients simply want the plan that allows them to see the doctors they’re used to. The providers and health systems that patients use have often had years to build trust, while patients may only interact with their insurance carrier when there’s a problem with a claim being paid or with getting approval for care they need. Some established insurance carriers are beginning to do more client outreach in an effort to change this, but the advantage is still strongly on the side of the doctors and hospitals that people already know and trust.

Increased efficiency means better care and higher profits – The ability to streamline patient care, as well as billing and claims, gets patients the care they need faster and more easily. It can also save money by eliminating unnecessary or redundant procedures and cutting back on the number of steps and man hours it takes to file and process a claim.

While becoming a carrier as well as a health system is a daunting task, it’s a trend on the rise for the simple reason that, if done well, it can lead to better, more efficient care and higher profits.

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