Health IT a key challenge for provider - owned plans

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