Health IT a key chal­lenge for provider - owned plans

Modern Healthcare - - NEWS - By Joseph Conn

There’s a boom­let un­der­way in health in­for­ma­tion tech­nol­ogy buy­ing, trig­gered by provider or­ga­ni­za­tions con­sid­er­ing or launch­ing their own Medi­care Ad­van­tage or com­mer­cial health plans.

Provider-run plans with­out long ex­pe­ri­ence in the in­sur­ance busi­ness face a chal­lenge in shop­ping for and set­ting up an IT sys­tem that will meet their needs. Hos­pi­tals, health sys­tems and med­i­cal groups al­ready are in the mar­ket for data an­a­lyt­ics and care-man­age­ment soft­ware. Those tools aug­ment their elec­tronic health-record sys­tems, aid­ing in pop­u­la­tion health risk assess­ments and man­ag­ing high-cost pa­tients with chronic con­di­tions. But they need even more tech­nol­ogy tools to op­er­ate as an in­surer.

“The EHR is a very dif­fer­ent tech­nol­ogy than what’s needed for man­ag­ing a health plan,” said Cathy Eddy, pres­i­dent of the Health Plan Al­liance, a 50-mem­ber trade as­so­ci­a­tion for provider-spon­sored plans that has been grow­ing re­cently at a rate of three to four plans a year.

For many providers want­ing to start their own health plans, the likely path is a “best-of-breed” strat­egy in­volv­ing shop­ping for com­po­nent parts of a com­plete IT sys­tem. “One’s head starts to spin” when look­ing at a shop­ping list of IT sys­tems or ser­vices a provider needs to be­come a plan, said Mike Nu­gent, man­ag­ing di­rec­tor of the healthcare prac­tice at Nav­i­gant, a Chicago-based con­sul­tancy that ad­vises provider-spon­sored health plans on their tech­nol­ogy needs.

Serv­ing provider-spon­sored plans is a grow­ing busi­ness for health IT ven­dors. “It’s rapidly de­vel­op­ing,” added Kevin Weinstein, chief growth of­fi­cer for Chicago-based Va­lence Health, a devel­oper and seller of core tech­nolo­gies used by health plans. “You have 150 to 200 provider-spon­sored en­ti­ties and you’re prob­a­bly see­ing 10 to 20 added a year.”

Provider-owned plans cover less than 10% of the pri­vate in­sur­ance mar­ket, but their mem­ber­ship is grow­ing, ac­cord­ing to a Fe­bru­ary anal­y­sis by A.M. Best Co. of 150 provider-owned plans. En­roll­ment in­creased to 19.1 mil­lion in 2013, up 4% from 2012.

To­tal pre­mium dol­lars col­lected for provider-owned plans rose 11% from 2011 to 2013, more that 2 points higher than the 8.9% growth for all in the in­dus­try, A.M. Best re­ported. In 2013, Medi­care Ad­van­tage mem­ber­ship

in provider-owned plans grew 8.2%, while Med­i­caid mem­ber­ship grew 15.3%.

Ex­perts say many health sys­tems are con­sid­er­ing smallscale plan star­tups to avoid con­flict with tra­di­tional health in­sur­ance com­pa­nies, and are par­tic­u­larly eye­ing the Medi­care Ad­van­tage busi­ness be­cause they feel they know how to man­age se­niors’ care.

Nu­gent said providers start­ing health plans need to con­sider the three “of­fices” in which health plan IT will be used. One is front-of­fice tech­nol­ogy, which in­cludes a cus­tomer­re­la­tion­ship-man­age­ment sys­tem to mon­i­tor sales and mar­ket­ing. The front-of­fice tool kit also may have por­tals for bro­kers, providers and plan mem­bers. Then there are mid­dle-of­fice sys­tems for phar­macy man­age­ment, med­i­cal man­age­ment, data an­a­lyt­ics and re­port­ing, and provider con­tract man­age­ment. The third of­fice con­sists of back­of­fice tools—the core data­base sys­tems for mem­ber en­roll­ment, billing and claims pro­cess­ing, and ad­ju­di­ca­tion.

In each of these three ar­eas, “you can pretty much buy com­mer­cial off-the-shelf prod­ucts to build the health plan,” said Daniel Knies, chief tech­nol­ogy of­fi­cer and co- founder of Chicago-based Aldera. His firm sells many of the parts, in­clud­ing por­tals, data an­a­lyt­ics and a core back-of­fice sys­tem in part­ner­ship with Va­lence Health.

As an al­ter­na­tive to buy­ing off-the-shelf prod­ucts, provider-owned plans can con­tract out for al­most all of these plan func­tions on a ser­vice ba­sis. That means providers don’t need to own the soft­ware or hard­ware or em­ploy the peo­ple to run them. That re­duces IT cap­i­tal costs and pro­cure­ment time.

This month, Crys­tal Run Healthcare, a 300physi­cian mul­ti­spe­cialty med­i­cal group in Mid­dle­town, N.Y., jumped into the com­mer­cial health in­sur­ance mar­ket, of­fer­ing health plans to em­ploy­ers in its three-county, Hud­son River Val­ley ser­vice area. It hired Fran­cis Cheung, a vet­eran health IT ex­ec­u­tive with ex­pe­ri­ence at the health plan and provider sys­tem lev­els, as its chief in­for­ma­tion of­fi­cer.

Crys­tal Run is a long-term cus­tomer of EHR devel­oper NextGen Healthcare In­for­ma­tion Sys­tems and also uses in­ter­op­er­abil­ity soft­ware from Mirth, both owned by Qual­ity Sys­tems, Irvine, Calif.

Cheung said his or­ga­ni­za­tion has de­vel­oped its own en­ter­prise data ware­house. It’s work­ing un­der a 10-year con­tract with Utah-based Health Cat­a­lyst, a data ware­hous­ing and an­a­lyt­ics firm. “We’ve in­vested heav­ily in our pop­u­la­tion health man­age­ment and care co­or­di­na­tion and care-man­age­ment ca­pa­bil­i­ties,” Cheung said. The med­i­cal group, how­ever, is buy­ing core claims pay­ment and ad­ju­di­ca­tion ser­vices from a com­mer­cial ven­dor. “In­sur­ance com­pa­nies have tremen­dous ex­pe­ri­ence do­ing that,” he said. “I don’t see us cre­at­ing a new claims-pro­cess­ing sys­tem.”

Eight-hos­pi­tal St. Luke’s Health Sys­tem in Boise, Idaho, has con­tracted with Selec­tHealth, the health in­sur­ance arm of Salt Lake City-based In­ter­moun­tain Healthcare, to serve as third-party ad­min­is­tra­tor for St. Luke’s 2-year-old health plan. The plan is a joint ven­ture be­tween St. Luke’s and In­ter­moun­tain. Selec­tHealth han­dles the back-end IT du­ties for the plan, said Beth Toal, a St. Luke’s spokes­woman. The plan cov­ers St. Luke’s em­ploy­ees and the public, in­clud­ing en­rollees from Utah’s fed­eral in­sur­ance ex­change and work­ers in em­ployer plans. It also of­fers a Medi­care Ad­van­tage prod­uct.

A num­ber of other com­pa­nies spe­cial­ize in pro­vid­ing health IT sys­tems for provider-run plans, in­clud­ing En­gle­wood, Colo.-based TriZetto and Birm­ing­ham, Ala.based DST Sys­tems.

Joel Glea­son, se­nior vice pres­i­dent for healthcare sys­tems at TriZetto, said his firm of­fers three core claims-pro­cess­ing prod­ucts, based on plan size and com­plex­ity, as well as end-to-end busi­ness process ser­vices and con­sult­ing ser­vices to many provider-owned plans. The hard part isn’t the tech­nol­ogy, he said. The tough part is for plans to de­fine their strat­egy, un­der­stand their mar­ket and know their provider or­ga­ni­za­tion’s abil­ity to de­liver a prod­uct at a com­pet­i­tive price. “Those parts are not plug and play,” he said.

DST So­lu­tions, a ven­dor of soft­ware and ser­vices for health in­sur­ers, has been serv­ing provider-owned plans for nearly 35 years. Adele Al­li­son, di­rec­tor of gov­ern­ment af­fairs, said busi­ness is pick­ing up across many ser­vices the com­pany of­fers providers. The com­pany re­cently added a con­sult­ing ser­vice to help providers as­sess which al­ter­na­tive pay­ment mod­els make sense for them—be it an ac­count­able care model or a full-risk health plan. DST also of­fers mar­ket anal­y­sis on com­pe­ti­tion and en­roll­ment mix.

“We can help a provider go through a process of plot­ting (its) path,” Al­li­son said. “You might not be able to go from zero to 60 in one year.”

DST can sell a provider a suite of soft­ware sys­tems, in­clud­ing a core claims-pro­cess­ing sys­tem, pop­u­la­tion health man­age­ment soft­ware, an out­sourced cus­tomer call-cen­ter ser­vice and a phar­macy ben­e­fits man­ager.

The com­pany’s pop­u­la­tion health soft­ware, CareA­n­a­lyzer, of­fers a case-mix as­sess­ment method­ol­ogy de­vel­oped by Johns Hop­kins Univer­sity to en­able plans to iden­tify and bet­ter man­age likely high-cost, high-utiliz­ing mem­bers. “We can take a pa­tient pop­u­la­tion and run it through our CareA­n­a­lyzer and say these are the top 5% that will use 50% of your care,” Al­li­son said. “And you can iden­tify other pa­tients to keep them from fall­ing into the top 5%.”

Some plans buy CareA­n­a­lyzer soft­ware and run it on their own, or DST can run it for them.

No health IT sys­tem comes fully ready to

use, said Dan Yunker, CEO of Land of Lin­coln Health, a not­for-profit co-op plan in Illi­nois that is in­de­pen­dent of providers but orig­i­nally was co-spon­sored by the Metropoli­tan Chicago Healthcare Coun­cil, a hos­pi­tal group. “You have a lot of test­ing to do to make sure your ex­pec­ta­tions are be­ing met,” he said. “It’s a multi-month process.”

Land of Lin­coln spent months build­ing its own data­base for 18,000 providers, got it work­ing, then de­cided to buy the provider di­rec­tory sys­tem from a ven­dor. He stressed the im­por­tance of hav­ing a solid provider di­rec­tory data­base. “Your user ex­pe­ri­ence is go­ing to be im­pacted by the ac­cu­racy of that list.”

Yunker also ad­vises plans not to un­der­es­ti­mate the im­por­tance of hav­ing IT pro­fes­sion­als with health in­sur­ance ex­per­tise on staff. “You could have the most tal­ented IT per­son in a large healthcare-de­liv­ery or­ga­ni­za­tion and they won’t un­der­stand the data flow of an in­sur­ance com­pany,” he said.

The 20-year-old CoxHealth Plan shows provider or­ga­ni­za­tions con­sid­er­ing start­ing their own plan what’s pos­si­ble. Owned by the CoxHealth sys­tem in Spring­field, Mo., the plan ini­tially out­sourced claims-pro­cess­ing to a third-party ad­min­is­tra­tor, but later brought that func­tion in-house. It now uses a core claims-pro­ces­sor prod­uct called Qnext from TriZetto.

“The key is tak­ing own­er­ship of that and un­der­stand­ing the ins and outs and be­com­ing sub­ject mat­ter ex­perts in our sys­tem,” said Matthew Aug, CEO of the 40,000-mem­ber plan. The plan has av­er­aged a 1.5% to 2% mar­gin over the past 10 years. Im­proved IT “def­i­nitely has en­abled us to do a lot of things we couldn’t do 10 years ago,” he said.

CoxHealth Plan also uses data an­a­lyt­ics soft­ware from two other ven­dors, in­clud­ing Al­te­gra, Mi­ami Lakes, Fla., which helps the plan track in­di­vid­ual providers’ per­for­mance. “If we’re look­ing at uti­liza­tion by a provider in a spe­cialty, we can see out­liers,” Aug said.

“Sys­tems have to re­al­ize run­ning a heath plan is very com­plex,” Aug said. “It doesn’t run by it­self. But there is op­por­tu­nity there. We’ve priced risk for 20 years. We get a pre­mium dol­lar and we have to op­er­ate un­der it. The tech­nol­ogy makes it eas­ier.”

“You have a lot of test­ing to do to make sure your ex­pec­ta­tions are be­ing met. It’s a multi-month process.” — Dan Yunker, CEO, Land of Lin­coln Health

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