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Aetna considers creating health-services unit

 

bigfish

 

Besides trying to grab more of the very lucrative Medicare Advantage business of Humana,  which it seeks to buy, Aetna hopes   to create a health-services division with Humana’s other assets.

As Modern Healthcare noted: “It’s a sign that even the largest health insurance companies realize they must do more than just sell health insurance if they want to remain at the top of the food chain in the long term. UnitedHealth Group has embraced this model through its Optum subsidiary. ”

Consider that Humana controls America’s fourth-largest pharmacy benefit manager,  which lets it negotiate “prescription drug prices on its own instead of outsourcing. It has also invested in the clinically based Humana At Home division, which helps seniors transition out of the hospital and into their homes.”

“Aetna could create its own version of Optum, which is built primarily around clinical consulting, data analytics and drug management. While Humana has the clinical and pharmacy parts, Aetna has the healthcare information technology components, which include Healthagen and Bswift. Healthagen works with hospitals and health systems on accountable-care contracting, and Bswift is a technology company focused on private exchanges.”


Bundled payments or population health?

 

Ian Morrison, Ph.D., a consultant and futurist based in Menlo Park, Calif. , writes about whether hospitals should focus on population health or bundled payments.

He notes that there’s  “growing skepticism among many respected industry experts who question whether population health, providers at risk and Accountable Care Organizations are really the right answer. They fear these models may all turn out to be a bridge too far. Instead, they argue, we should get the basics of healthcare delivery right first. Then we should use bundled payment–type models as our lead foray into financial incentives that promote improved care coordination and clinical performance delivered by focused, high-performing teams.”.”So, there is a plausible … conclusion that meaningfully incenting providers to deliver care by taking financial risk for a defined population they serve (across the continuum of care) is an impossible dream that will end in failure. Therefore, we should settle back on bundles and other less grandiose improvement initiatives instead.”On the contrary, I still believe that our best hope for sustainable health care may well come from large integrated systems of care competing on the basis of cost and quality for a defined population.”

“Overall, my forecast can be summed up as follows:

“Integrated systems with their own health plans, regional scale, direct contracting and Medicare Advantage contracts is the end game for some large players who are preparing for population health risk.”

“Many hospitals will be caught between two paradigms for the next five years (at-risk vs. fee-for-service), but the direction is toward more risk-bearing on the basis of value through a variety of constantly evolving partnerships and risk-sharing arrangements.

“Bundled payment for procedure-oriented care presents a major step toward promoting value and care coordination that does not require population health (frequency risk).

“And finally: Value-based payment trends are not enthusiastically embraced by providers. So expect public payers to make more payment innovations mandatory, not just voluntary.”

 

 


Anthem’s scary takeover of Cigna

 

Anthem’s takeover of Cigna scares a lot of people. The  merger may well create more efficiencies  within the new behemoth, and perhaps the huge new enterprise’s supercharged payer clout will drive down excessive provider prices. But many fear that the deal will dramatically reduce  private-market price and quality competition  and consumer choice sought in the Affordable Care Act and undermine coordinated-care networks.

Meanwhile, it’s clear that a core  aim of the merger is  to benefit more from the Medicare Advantage premiums bonanza.

It almost seems as if we’re headed for a private-sector single-payer system!

 

 


More systems eye entering insurance business

 

northcarolina

In western North Carolina’s mountains.
One large health system in North Carolina is ready to launch a Medicare Advantage plan, and two others  in the Tar Heel state are mulling the pros and cons of becoming a payer. Cone Health, a $1.4 billion health system in Greensboro,  has received a state license to sell health insurance, and it’s in the process of receiving approval from the the Centers for Medicare and Medicaid Services to offer Medicare Advantage plans to seniors.

Modern Healthcare reports that “Health systems are increasingly jumping into the insurance space. Even though costly information technology and complicated actuarial predictions are large hurdles, organizations view health plans as the missing piece to the population health puzzle. If people in a hospital system’s service area are willing to go to those providers for care, why not offer the coverage to pay for it and keep the healthcare dollar local?””Cone Health runs a Medicare Accountable Care Organization called Triad Healthcare Network, which earned more than $10.5 million in shared savings in its first year. The early success of that ACO gave executives confidence that they could move to the more aggressive, capitated Medicare Advantage structure, in which the federal government pays private insurers lump sums for each member.”

Meanwhile, Mission Health, a $1.4 billion hospital network based in Asheville, is looking into entering the insurance business, though so far anyway,  the  system would prefer to build partnerships with established insurors rather than get into the business directly.

And Charlotte-based Carolinas HealthCare System, the largest system in the state, with almost $5 billion in annual revenue (PDF), also has no immediate plans to build a commercial insurance business.

But, Modern Healthcare reports, “Carolinas is changing how it works with insurers. The system was the first in the state to create a narrow-network product with Blue Cross and Blue Shield of North Carolina, the state’s dominant insurer. Carolinas is also participating in bundled payment programs with local employers, where Carolinas receives a fixed amount of money for certain cardiovascular procedures.”


The big get bigger

bigfish

Aetna’s planned  $37 billion purchase of rival  Humana, which would make Aetna the biggest health insurer, would accelerate the consolidation of health systems as hospitals seek more leverage in negotiating with insurers  whose increasing size gives them vast negotiating power.

The deal would make Aetna a major player in the surging Medicare Advantage business and  would bolster Aetna’s presence in   Medicaid and in Tricare coverage for military personnel and their families. But everyone in the healthcare sector  would be affected,  directly or indirectly, including Federally Qualified Health Centers.
Modern Healthcare noted that Aetna’s  announcement came  a day after the Medicaid coverage provider Centene said it would buy fellow insurer Health Net to  help Centene expand in  the California Medicaid market, the nation’s biggest, and give it a Medicare presence in several other western states.
As private-sector-employer-based insurance has shrunken, the big insurers are  expanding into public programs at an ever faster clip.

 

 

 

 


Making Medicare Advantage work for hospital-insurers

 

The biggest problem is that they underestimate how tough it is to compete with established insurance carriers.

 

Planning carefully for this competition  “can help determine whether it’s best to enter as an independent plan, partner with an established entity that brings the right capabilities, or to take delegated risk from a health plan for an attributed population.”

Further, “to maximize the benefits, providers need to know exactly what patients are attributed to the plan—and fiercely manage each and every individual accordingly. For the sickest and riskiest patients, that means delivering care differently—more targeted and coordinated across points of care—to drive savings in a major way.”

“Most provider-turned-health plans are at least somewhat well-positioned to improve the quality and reduce the cost of patient care across a network if incentives are appropriately aligned; this of course is fundamental to running a profitable plan.”

“The best plans go to great lengths to learn and document every last issue about their patients to get this right, and then receive higher payments from CMS for those riskier patients.”

 

 

 

 


Narrowing networks harrowing for specialists

 

basal

Basal-cell cancer.

Dermatologists  seem particularly up in arms about the narrowing of insurance contracts that have hit them and other specialists.

Brett Coldiron, M.D.,  president of the American Academy of Dermatology, says, reports Dermatology Times, that cuts to Medicare Advantage plans  caused insurers to eliminate their most expensive patients by eliminating the doctors who treat them from their network. ”Despite the fact their government reimbursement has declined from 114 percent to 104 percent of fee for service Medicare, the overall profit margin of insurers has increased.”

“In the long run, they will not save money,” he said. “They are de-listing physicians for treating the sickest patients. Delayed care means greater risk of mortality and more expensive care later on. What does it cost to treat someone with metastatic melanoma [compared to melanoma that has not metastasized]?”

Dermatology Times reports: “One of the distressing realities of this de-listing phenomenon is that patients who will be most affected are retirees, typically over 65 years of age, who have been making Medicare contributions throughout their working years, according to Dr. Coldiron.”

This last  remark is rather misleading. It’s common to say that since people paid into Medicare and Social Security in their working years that they have more than paid for what they get from services later in life. But because of increased longevity and the world’s most expensive medical care, most older people take out considerably more than they pay in, helping to intensify the nation’s long-term fiscal challenge.


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