In a pre-pandemic world, providers and payers were proceeding with their usual pace toward value-based reimbursements. With a steadily-growing patient volume and broad health insurance coverage options, providers had the option of implementing value-based payment models with any number of insurance companies. Over time, providers began to explore the benefits of integration and in some cases, chose to offer their own health plans.

There are some significant examples of health systems offering provider-led health plans, or PLHPs, such as Geisinger, University of Pittsburgh Medical Center, and more where health systems have access to the scale and efficiency of health plan operations while being able to make care decisions for the members they serve. However, the move is not without risk. And much like the rest of the healthcare system, the provider-led health plans will evolve as well.

What are the drivers of provider-led health plans?

According to a 2015 McKinsey report around provider-led health plans, U.S. healthcare witnessed a phenomenon similar to the rise in provider-led health plans back in the 1990s. According to the report, there are four reasons that can be attributed to the rise in provider-led health plans:

1. Explicit linkages between care quality and reimbursement: with an increase in the adoption of value-based care models, more and more providers are encouraged to take on risk for the care they provide. Additionally, payers are trying to ensure that their members receive comprehensive care and are willing to fund provider efforts.
2. Improved access to data, driven by technology: healthcare organizations have made significant improvements in leveraging data to enable better care, and these data-driven insights work best in a comprehensive, connected care continuum that a provider-led health plan can support.
3. Increasing consumer acceptance of restricted-access networks: Although members rebelled against the restrictions on access to providers then, today they are much more accepting of the emerging narrow networks in order to contain their healthcare spending.
4. New markets in which to offer products: Through public and private exchanges, providers have more options for marketing themselves to consumers.  This flexibility offers providers an entry point into rapidly-growing customer segments.

What is the current landscape like?

As of 2017, provider-led health plans cover about 17.5 million members across 42 states. The enrollment is growing faster than the overall payer market at an average of 2.7 percent a year. Across different payer segments, provider-led health plans seem to have a higher penetration in Medicaid and individual segments.

There are many kinds of integration methodologies that can be leveraged to strengthen a provider-led health plan. From an alliance or a joint venture to an acquisition or a merger, there are many ways to integrate care delivery with insurance. Through a well-planned integration, the outcomes for members and the organization can be remarkably positive.

As mentioned earlier, access to healthcare data has considerably improved in the modern world and has allowed organizations to uniquely manage population health while maintaining the cost of care. Provider-led health plans can be a significant catalyst in creating a connected-care framework in U.S. healthcare. Provider-led health plans can leverage innovative and distinct population health programs: a systematic analysis of the members enrolled in the plan can identify members with critical healthcare needs and direct the attention of providers towards those high-risk groups. These high-risk members can gain access to care coordination, telemedicine, home health, and community resources tailored to their needs.

As a result of this connected care framework, members of the health plan can also achieve a higher level of satisfaction compared to traditional insurers. Provider-led health plans offer less friction in coordinating care as an outcome of real-time information sharing among providers. Additionally, the financial impact of such plans can lead to improved quality of care, patient satisfaction and network leakage, which can help in reducing the cost of care. From maintaining medication adherence to addressing the non-clinical needs of chronic patients, provider-led health plans with a connected care backbone can help improve performance in a value-based healthcare environment.

How will provider-led health plans change in a post-COVID world?

In response to the COVID-19 pandemic, health insurers across the U.S. are expanding coverage and providing greater access to services to their members. Health plans have seen a spike in care related to COVID-19 and other chronic conditions, and this cost would need to be included in the premiums. At the same time, the care delivery arm of these organizations that have postponed all elective surgical procedures and other non-urgent care would need to plan ahead. Some of these procedures can be addressed in the rest of 2020, and much of it will stretch to 2021.

During the pandemic, however, many providers are forced to make difficult clinical and financial decisions.  As elective procedures are delayed, a significant portion of staff is furloughed or redeployed across many health systems, while make-shift treatment facilities and morgues are created to keep up with the overwhelming number of COVID-19 patients. In times like this, it becomes even more challenging for providers offering health plans to provide access to all healthcare services and deliver the same level of care to patients.

As a result of the reduction in elective care and limits on regular visits, provider-led health plans would probably have to dip into their cash reserves. It’s likely that larger, for-profit plans may weather this crisis more easily than smaller ones. Provider-led health plans will need to conduct a detailed analysis of their members and better align incentives for providers in the future by disincentivizing volume-driven care. Additionally, these plans can make a clean break from the old, run-of-the-mill programs and switch to the next generation of technology and capabilities such as virtual care.

For most health systems, offering a health plan is challenging, to say the least. It will take an aligned strategy along with well-developed data capabilities to determine how ready they are to venture into offering health plans. There is still much to learn during the ongoing pandemic, and all healthcare entities, including provider-led health plans, will need to adapt under extreme pressure. Staying apprised of changes and developing a dynamic strategy can help them remain transparent and afloat during this crisis.