Provider-owned insurers in the individual market.

OBJECTIVES: To describe the number and availability of individual market plans sold by provider-owned insurers and compare differences in premiums between traditional and provider-owned insurers. STUDY DESIGN: Cross-sectional analysis. METHODS: Using the Robert Wood Johnson Foundation's HIX Compare data, we identified insurers selling Affordable Care Act (ACA)-compliant policies in the individual market and identified those insurers owned by health systems by using information on their websites. We determined the number of insurers selling policies in each market and the size of the population living in areas where provider-owned insurers sold plans in 2016 and 2017. We used least squares regression to compare premiums between traditional and provider-owned insurers within markets, and we adjusted standard errors for clustering at the market and insurer level. RESULTS: There were 149 insurers that sold ACA-compliant plans in 2017, of which 51 were provider owned. Provider-owned insurers operated in 208 of the 503 exchange markets. We estimate that about 62% of US residents (more than 170 million people) live in a market in which a provider-owned insurer sells plans. Premiums did not differ significantly between traditional and provider-owned plans in 2017. CONCLUSIONS: Provider-owned insurers play a prominent role in the individual insurance market. Although health systems that sell insurance have incentives to reduce costs, provider-owned insurers and traditional insurers have similar premiums.

Assessing the Financial Condition of Provider-Sponsored Health Plans.

PURPOSE: The aim of this study was to assess the performance of health plans sponsored by provider organizations, with respect to plans generating strong positive cash flow relative to plans generating weaker cash flow. A secondary aim was to assess their capital adequacy. DESIGN: The study identified 24 provider-sponsored health plans (PSHPs) with an average positive cash flow margin from 2011 through 2013 at or above the top 75th percentile, defined as "strong cash flow PSHPs:" This group was compared with 72 PSHPs below the 75th percentile, defined as "weak cash flow PSHPs:" METHODOLOGY: Atlantic Information Services Directory of Health Plans was used to identify the PSHPs. Financial ratios were computed from 2013 National Association of Insurance Commissioners Financial Filings. The study conducted a t test mean comparison between strong and weak cash flow PSHPs across an array of financial performance and capital adequacy measures. RESULTS: In 2013, the strong cash flow PSHPs averaged a cash-flow margin ratio of 6.6%. Weak cash flow PSHPs averaged a cash-flow margin of -0.4%. The net worth capital position of both groups was more than 4.5 times authorized capital. CONCLUSION: The operational analysis shows that strong cash-flow margin PSHPs are managing their medical costs to achieve this position. Although their medical loss ratio increased by almost 300 basis points from 2011 to 2013, it was still statistically significantly lower than the weaker cash flow PSHP group (P<.001). In terms of capital adequacy, both strong and weak cash-flow margin PSHP groups possessed sufficient capital to ensure the viability of these plans.

Economic impact of converting an interventional pain medicine physician office-based practice into a provider-based ambulatory pain practice.

BACKGROUND: One consequence of the shifting economic health care landscape is the growing trend of physician employment and practice acquisition by hospitals. These acquired practices are often converted into hospital- or provider-based clinics. This designation brings the increased services of the hospital, the accreditation of the hospital, and a new billing structure verses the private clinic (the combination of the facility and professional fee billing). One potential concern with moving to a provider-based designation is that this new structure might make the practice less competitive in a marketplace that may still be dominated by private physician office-based practices. The aim of the current study was to evaluate the impact of the provider-based/hospital fee structure on clinical volume. OBJECTIVE: Determine the effect of transition to a hospital- or provider-based practice setting (with concomitant cost implications) on patient volume in the current practice milieu. SETTING:   Community hospital-based academic interventional pain medicine practice. STUDY DESIGN: Economic analysis of effect of change in price structure on clinical volumes. METHODS: The current study evaluates the effect of a change in designation with price implications on the demand for clinical services that accompany the transition to a hospital-based practice setting from a physician office setting in an academic community hospital. RESULTS: Clinical volumes of both procedures and clinic volumes increased in a mature practice setting following transition to a provider-based designation and the accompanying facility and professional fee structure. Following transition to a provider-based designation clinic visits were increased 24% while procedural volume demand did not change. LIMITATIONS: Single practice entity and single geographic location in southeastern United States. CONCLUSIONS: The conversion to a hospital- or provider-based setting does not negatively impact clinical volume and referrals to community-based pain medicine practice. These results imply that factors other than price are a driver of patient choice.  

Seeking lower prices where providers are consolidated: an examination of market and policy strategies.

The ongoing consolidation between and among hospitals and physicians tends to raise prices for health care services, which poses increasing challenges for private purchasers and payers. This article examines strategies that these purchasers and payers can pursue to combat provider leverage to increase prices. It also examines opportunities for governments to either support or constrain these strategies. In response to higher prices, payers are developing new approaches to benefit and network design, some of which may be effective in moderating prices and, in some cases, volume. These approaches interact with public policy because regulation can either facilitate or constrain them. Federal and state governments also have opportunities to limit consolidation's effect on prices by developing antitrust policies that better address current market environments and by fostering the development of physician organizations that can increase competition and contract with payers under shared-savings approaches. The success of these private- and public-sector initiatives likely will determine whether governments shift from supporting competition to directly regulating payment rates.

Current market trends in hospital/physician integration.

This article explores recent trends that are dramatically changing the landscape of typical hospital/physician integration models and provides the reader with useful insights to better evaluate this dynamically changing marketplace.

Insurer-Provider Networks in the Medical Care Market.

I use data on the hospital networks offered by managed care health insurers to estimate the expected division of profits between insurers and providers. I include a simple profit-maximization framework and an additional effect: hospitals that can secure demand without contracting with all insurers (e.g., those most attractive to consumers and those that are capacity constrained) may demand high prices that some insurers refuse to pay. Hospital mergers may also affect price bargaining. I estimate that all three types of hospitals capture higher markups than other providers. These results provide information on the hospital investment incentives generated by bargaining.

Change of plans. Squeezed by soaring medical costs and other demands for their revenue, providers are continuing to sell off their health plans.

More systems are deciding to get out of the health insurance business, pushed by higher medical costs and increasing demands for construction and IT projects. It's a climate that can be tough for smaller organizations. "The system needs a very good demographic and a strong balance sheet to support both the provider side and the health plan side," says Eva Sverdlova, left, an analyst at A.M. Best.

A preliminary investigation of the effects of a provider network on costs and lost-time in workers' compensation.

OBJECTIVE: We sought to compare lost-time days and average and median workers' compensation claims costs between injured workers managed by OMNET Gold (OG) physicians and those managed by physicians not participating in OG. OG is a statewide health care provider network coordinated by occupational medicine physicians and established by the Louisiana Workers' Compensation Corporation (LWCC) to manage the medical care of injured workers. METHODS: We identified and contrasted 158 lost-time claims managed by OG physicians and 1,323 claims managed by physicians not participating in OG during the first year of network operation (August 1, 2003 to July 31, 2004). RESULTS: The average and median costs for a non-OG claim was $12,542 and $5,793, whereas the average and median costs for an OG claim was $6,749 and $3,015. The average and median number of lost-time days for an OG claim was 53.4 and 34.0 and 95.0 and 58.0 for a non-OG claim. The mean differences were statistically significant. CONCLUSIONS: A small network of physicians may have an effect on the duration of lost-time and workers' compensation costs.