Wis­con­sin sys­tems are lead­ers in offering their own health plans

Modern Healthcare - - NEWS - By Bob Her­man

Wis­con­sin is known for its dairy farms and rolling hills. But some health­care ex­perts call it a trail­blazer.

In the past few years, health sys­tems have been launch­ing or ex­pand­ing their own health plans, see­ing it as an op­por­tu­nity to cut out the mid­dle­man and take on more fi­nan­cial risk while car­ing for pa­tients.

In Wis­con­sin, providers have prac­ticed that strat­egy for decades. And, ac­cord­ing to Medi­care and the Na­tional Com­mit­tee for Qual­ity As­sur­ance, their plans are among the high­es­trated in the coun­try.

The Badger State could serve as a pro­to­type for health sys­tems that are try­ing to shift their fo­cus from fill­ing hos­pi­tal beds to more risk-based care co­or­di­na­tion.

“In­sur­ers have put risk down to providers,” said Gun­jan Khanna, a part­ner in the health­care prac­tice at McKin­sey & Co. “At what point do providers start to have their own en­tity to man­age the risk and have con­trol?” Wis­con­sin has done that well, he said.

Na­tion­wide, about 13% of health sys­tems own a health plan. There are nine provider-owned plans in Wis­con­sin, sec­ond only to Texas, ac­cord­ing to data from McKin­sey.

Dean Health Plan, Se­cu­rity Health Plan, Unity Health In­sur­ance and sev­eral oth­ers of­fer com­mer­cial, Medi­care Ad­van­tage and Med­i­caid plans in the state. Those plans cover al­most a third of Wis­con­sin’s in­sured pop­u­la­tion, based on a re­cent anal­y­sis from con­sult­ing firm Deloitte. The only state with a higher pen­e­tra­tion is Utah, where 36% of peo­ple are cov­ered by provider plans.

There are a num­ber of rea­sons provider-owned health plans are a sta­ple in Wis­con­sin, which has about 5.8 mil­lion res­i­dents.

Com­mer­cial in­sur­ers his­tor­i­cally have avoided in­sur­ing vul­ner­a­ble, costly pa­tients. That’s al­lowed in­sur­ers such as Chil­dren’s Com­mu­nity Health Plan, owned by Mil­wau­kee-based Chil­dren’s Hos­pi­tal of Wis­con­sin, to cover nearly 137,000 Med­i­caid adults and chil­dren, said Bob Duncan, the hos­pi­tal’s ex­ec­u­tive vice pres­i­dent for com­mu­nity ser­vices.

Out­side of the south­east and south cen­tral re­gions, where Mil­wau­kee and Madi­son are lo­cated, Wis­con­sin’s pop­u­la­tion thins out quickly. Ru­ral ar­eas typ­i­cally have fewer in­sur­ance op­tions, and that spurred hos­pi­tals and doc­tors to of­fer cov­er­age to their pa­tients.

“A lot of com­mu­ni­ties didn’t have strong na­tional or Blues pen­e­tra­tion, and there had to be an an­swer to some­one fi­nanc­ing health­care,” said Bill Copeland, a health­care an­a­lyst at Deloitte. “The dom­i­nant mar­ket lead­ers—provider sys­tems—started those plans a long time ago. In Wis­con­sin, I think that’s es­pe­cially true.”

What makes Wis­con­sin dif­fer­ent from other states is that most providers didn’t quit the in­sur­ance busi­nesses they es­tab­lished in the 1990s. Many hos­pi­tal-based plans across the coun­try failed or were sold off more than a decade ago. A lack of rate-set­ting ex­pe­ri­ence and data hurt their plans as did the grow­ing com­pe­ti­tion from pure­bred in­sur­ance com­pa­nies. “In most of the other mar­kets where th­ese health plans evap­o­rated, it hap­pened be­cause the provider sys­tem wasn’t able to man­age the tension be­tween their own health plan and the third-party stand-alone pay­ers in their mar­ket,” Khanna said.

How­ever, hos­pi­tal-owned plans have not nec­es­sar­ily led to lower health­care spend­ing. From 1991 to 2009, per-capita spend­ing on hos­pi­tal and physi­cian care in Wis­con­sin grew at a faster pace than the U.S. av­er­age and ranked the high­est of the five Great Lakes states, ac­cord­ing to CMS data.

While many Wis­con­sin health sys­tems have ex­pressed a de­sire to be more in­volved on the fi­nanc­ing side, not all of them want to deal with the high cap­i­tal re­quire­ments or strin­gent reg­u­la­tions as­so­ci­ated with own­ing a health plan. Con­se­quently, two broad part­ner­ships have emerged in the past year to work more closely with pay­ers: AboutHealth and In­te­grated Health Net­work. AboutHealth in­cludes eight health sys­tems and their 48 hos­pi­tals. IHN has eight health sys­tems and 49 hos­pi­tals.

Aside from im­prov­ing care qual­ity, shar­ing data and pulling out waste­ful costs, the two com­pet­ing al­liances look to con­tract with in­sur­ers and em­ploy­ers to build broader net­works. That ef­fort has not come with­out con­flict. Some in­sur­ers have al­ready part­nered with AboutHealth, for in­stance, but oth­ers have not been so thrilled to see the state’s ma­jor provider sys­tems team up for ne­go­ti­a­tions.

“It has not at all been a uni­form re­sponse,” said Dr. Nick Turkal, CEO of Aurora Health Care, a 15-hos­pi­tal, $4.7 bil­lion sys­tem based in Mil­wau­kee. Aurora does not own its own health plan but is part of AboutHealth.

Marsh­field Clinic Health Sys­tem, which owns Se­cu­rity Health Plan, is also an AboutHealth mem­ber. Marsh­field CEO Dr. Susan Tur­ney said re­gard­less of whether providers own a health plan, more has to be done to en­sure pa­tients are in­cen­tivized to get the right care. “Pa­tients are telling us ... they de­lay med­i­cal care pretty con­sis­tently when they don’t have the re­sources to pay for it,” Tur­ney said.

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