The first four months of 2016 have already seen three new partnerships announced between Wisconsin health systems and insurance companies. Looking down the road, it appears that provider-led health plans may soon become a major force in Wisconsin health insurance.
In January, Aspirus and WPS Health Solutions announced that they are forming a new health insurance company in north-central Wisconsin that will be called Aspirus Arise Health Plan of Wisconsin. In April, Anthem Blue Cross and Blue Shield Wisconsin and Aurora announced plans to start a new insurance company, Wisconsin Collaborative Insurance Co., that would sell plans in 45 counties throughout the state. And only two days later, Wisconsin Commissioner of Insurance Ted Nickel approved a proposed merger between Unity Health Insurance and Gundersen Health Plan. All three of these partnerships follow the 2014 agreement between Froedtert Health and Ministry Health Care to pursue co-ownership of Menasha-based Network Health.
Healthcare providers are forming these joint ventures with insurance companies because they see that the future of healthcare will involve going beyond simply treating the illnesses and injuries of individuals towards managing the overall health of a patient population. This paradigm shift is being driven by the move away from the fee-for-service payment model that has dominated healthcare in America for decades towards value based payments. The shift is also enabled by developments that facilitate greater coordination among healthcare providers, including the creation of Accountable Care Organizations and integrated health networks and the adoption of electronic medical records.
Under the traditional fee for service model, providers charge payers (insurance companies or employers) for each covered service they perform. In contrast, a value based payment system pays providers for episodes of care for their patients’ conditions rather than individual treatments or procedures. Providers who are able to manage patients’ care more efficiently will benefit under a value based payment model, as will the insurance companies whose patients utilize high-performing providers.
Because both providers and insurers will take on additional responsibility for keeping a population healthy, and because they both stand to benefit by achieving this goal, partnerships between insurance companies and healthcare providers is a logical next step. Providers will be able to tap into the insurer’s plan administration, marketing, and distribution expertise, while the insurer can draw upon providers’ clinical knowledge and obtain the most favorable reimbursement levels. If successful, these partnerships should result in lower health costs for employers and patients, while at the same time keeping providers and insurers in business. What remains to be seen is whether employers and individuals will get on board with the concept and choose a health plan that offers lower costs for access to a limited network of providers.