Two Mid­west sys­tems see op­por­tu­nity where Medi­care Ad­van­tage en­roll­ment lags

Modern Healthcare - - NEWS - By Bob Her­man

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.”

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