Hospitals

Mayo, Medica partner to create alternative to fee-for-service health insurance

Medtronic CEO Omar Ishrak has proved prescient. Less than a month ago, Ishrak predicted that there will be continued payer-provider integration irrespective of the U.S. Supreme Court’s decision on the healthcare reform law expected later this month. And Thursday, Mayo Clinic announced that it has signed a one-of-a-kind agreement with nonprofit Minnesota health plan Medica […]

Medtronic CEO Omar Ishrak has proved prescient.

Less than a month ago, Ishrak predicted that there will be continued payer-provider integration irrespective of the U.S. Supreme Court’s decision on the healthcare reform law expected later this month.

And Thursday, Mayo Clinic announced that it has signed a one-of-a-kind agreement with nonprofit Minnesota health plan Medica by which the health provider will be paid for how well it manages the health of a certain patient population.

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Specifically, they are people  in 22 counties in Southern Minnesota who will buy new individual health and family plans directly from Medica and in turn be able to access both the Mayo Clinic campus in Rochester and the Mayo Clinic Health System in their communities. The plan goes into effect for new Medica members July 1. (Medica members covered through their employers could already access care at Mayo Clinic prior to this agreement.)

In a news conference, Mayo Clinic President and CEO John Noseworthy hailed the partnership.

“One of our founders, Dr. Charles Mayo, boldly once said that ‘If we excel in anything, it is our capacity for translating idealism into action.’  Today we are taking the ideal of paying for value by giving residents — our patients — in 22 southern Minnesota counties access to a new competitive health insurance coverage option through Medica,” Dr. Noseworthy said.

Medica’s President and CEO David Tilford underscored how the agreement takes into account the realities of spiraling costs in the nation’s healthcare system.

“This arrangement with Mayo Clinic provides the impetus for change through its focus on more effective and efficient delivery of care and a better understanding of the true costs of care,” Tilford said. “From Medica’s perspective, this is another example of the way health insurers must manage cost and quality differently from the old model of paying for every service provided to our members and recalibrate the system to pay for outcomes.”

While hailing the agreement as a unique collaboration between a payer and a provider,  Tilford was quick to point out what the agreement was not.

“I want to emphasize that this is not about the health plan dictating how care should be delivered,” he said. “It is the provider — in this case Mayo Clinic — who is redesigning the system to produce the best possible outcomes at the most efficient price.”

Current members with individual and family plans that have bought from Medica can change to the new plan once their anniversary comes up. The new plan will not charge any additional premium from members for access to Mayo, explained Dannette Coleman, vice president and general manager of individual products at Medica.

Yet, the announcement was deliberately slim on specifics. Both Mayo and Medica officials were silent on how exactly Mayo will be paid, and instead chose to say that the financial arrangement is “proprietary.” Neither did they address the kind of outcomes that will prove that Mayo is indeed keeping the patient population healthy.

While saying that compared to other insurance plans, Medica’s insurance plans providing access to Mayo is “competitive,” Medica officials could not say when patients will see the benefit of such collaboration through reduced premiums.

For that Medica will probably need to be convinced that the model works.

[Photo Credit: Flickr User Neff Conner]