Two Midwest systems see opportunity where Medicare Advantage enrollment lags

Two large Midwest health systems are building an insurance plan together around Medicare Advantage, and the joint venture marks yet another example of providers’ burning ambition to get into the insurance game. And many of them are honing their play in the Medicare league.

The growth of provider-owned health plans isn’t likely to subside. They provide new revenue streams and help providers manage care for high-risk patients such as Medicare beneficiaries, who typically represent half of a hospital’s patient base.

“These are the patients that require the most care coordination,” said Kevin Weinstein, chief growth officer at Valence Health, a Chicagobased company that builds and operates insurance plans for health systems. “There’s the most to gain clinically, and if you’re at risk for them, the most to gain financially.”

Another benefit of starting out with Medicare plans is that commercial insurers often aren’t so dominant that provider-owned plans can’t compete out of the gate.

Last week, UnityPoint Health, a 17-hospital system based in West Des Moines, Iowa, and HealthPartners, an integrated delivery system based in Bloomington, Minn., said they are creating a new health insurance company in which each organization will have a 50% stake. The company, HealthPartners UnityPoint Health, will only sell Medicare Advantage plans at first, but could branch into other lines of business.

The partners intend to start selling in 2017, and they could reap huge rewards in Illinois and Iowa, where only a tiny slice of the population has a private Medicare managed-care plan.

There are approximately 575,600 eligible Medicare beneficiaries in Iowa, but only 15% of them are enrolled in Medicare Advantage plans, according to a Modern Healthcare analysis of federal data. In Illi- nois, only 21% of the 2.1 million Medicare-eligible people have an Advantage plan.

The gates are wide open to capture that market share because competition from large, private insurers varies widely. For instance, Iowa’s largest insurer, Wellmark Blue Cross and Blue Shield, does not sell any Medicare Advantage products.

“That’s a big part of what motivated us—the relative under-penetration plus the growing demand,” said Troy Caraway, a senior vice president at UnityPoint who handles health insurance operations. UnityPoint first entered the insurance market when it acquired Madison, Wis.-based Meriter Health Services in 2013.

HealthPartners wants to capitalize on that nearby untapped Medicare market just as much as UnityPoint. HealthPartners— which grew the membership in its five-star-rated plan to nearly 14,000 from 6,000 in the past year—operates in a much more saturated market in Minnesota.

Although large national insurers

such as Aetna, Humana and UnitedHealth Group dominate Medicare Advantage nationally, health systems such as Pittsburgh-based UPMC continue to lure large numbers to their membership rolls. And UnityPoint and HealthPartners aren’t alone in their greenfield Medicare pursuits. Cone Health in Greensboro, N.C., for example, is selling a Medicare Advantage product for the first time this year.

While Medicare Advantage is a “relatively easy market” for health systems to enter, experts say they have to move into the individual and employer markets to sustain their operations and improve care coordination. Profitable provider plans usually have at least 100,000 members, according to a new report from consulting firm Deloitte.

“I don’t think Medicare alone is an endpoint,” said Bill Copeland, a healthcare analyst at Deloitte. “I think it’s a market-entry point.”