The rise of provider sponsored plans

Payer, provider or PayVider?

Payer, provider or PayVider?

Accountable Care Organizations enable providers of care to take on some of the functions of health plans and to receive some of the financial rewards as well as the risk. But at least on the Medicare side it can be fairly indirect, with patients “attributed” to providers rather than assigned and little formal ability to keep a patient within a single provider system.

So it’s not huge surprise that some integrated provider organizations are going further, and sponsoring Medicare Advantage (MA) plans themselves. That way they are literally both the payer and provider. Setting up an MA managed care plan and running an ACO are not mutually exclusive, since the MA plan applies just to those who sign up for managed care.

Avalere Health has released an interesting report on this phenomenon. Some key takeaways:

  • More than half of the MA plans that started between 2012 and 2015 were provider sponsored;
  • Provider sponsored plans are much more likely than other plans to achieve the top star ratings of 4 or 5;
  • In a few geographies, provider sponsored MA plans have enrolled the vast majority of MA members and account for more than 10 percent of all Medicare recipients (most of whom are in traditional fee for service Medicare);

Provider sponsored plans are not limiting themselves to the Medicare market. Some are going after commercial patients as well What does this all mean? A few things:

We need to reconsider the boundary between payers and providers; they are starting to overlap more.

Commercial health plans face even more pressure than before to demonstrate that they can add value –since providers are competing with them and showing better quality results. (The Avalere report was sponsored by Aetna –I’m not exactly sure what they were expecting to hear.)

Even if a Republican President and Congress overturn Obamacare, the concept of providers taking risk for Medicare patients isn’t going away. Medicare beneficiaries who are fans of a particular provider system should consider checking whether that system offers an MA plan.

Health care business consultant David E. Williams is President of Health Business Group, a leading strategy consulting boutique advising companies, non-profits and investors in health care services, health information technology, and pharmaceutical services.