In a healthcare market dominated by mergers and partnerships, how does a regional health plan stay relevant and competitive with the big kids on the block? We’ll explore 2 examples.
Integration value
For many regionals, a major battle is occurring to maintain integration of benefits (medical and pharmacy) across their customer base. Coordination and integration of benefits is perhaps the major reason for the Cigna/ESI and the CVS/Aetna acquisitions. The idea behind integration is to manage the total cost of care for a member by using data; both medical and pharmacy claims systems combined with strong analytics (historical and predictive) drives quality of care up and costs of care down. For example, Cigna reported that its efforts at cohesively managing medical, prescription, and mental health services saved an average of $207 per customer per year and more than $850 per customer per year with an identifiable health improvement opportunity (link).
The “integration” story is not new by any means. Regional health plans, such as Premera Blue Cross in Washington state has been touting the value of its integration of benefits for at least 8 years (link). These early efforts demonstrated credible results even before the plan became more aggressive in managing pharmacy and medical drug costs.
For regional plans that can make claims to being “integrated,” it will be important to fight carve-out—especially carve-out that benefits the PBM units of the 2 vertically integrated giants.
Value-based provider partnerships
For example, Blue Cross and Blue Shield of Minnesota acquired a 49% stake in North Memorial Health, a Minneapolis-based health system last year. The emphasis of the new organization, operating under the North Memorial brand name, is value-based payments over volume of services to provide consumers with more affordable care, better patient experiences, increased price transparency, and more predictability of future medical costs (link).
Forming an alliance, such as Peak Care in the Pacific Northwest, is another take of value-based provider partnerships. Premera Blue Cross and Multicare (an IDN) launched and codeveloped the Peak Care product based on an exclusive provider organization (EPO) model. Launched in 2018, the product expanded offerings in 2020. The offering will provide Peak Care plan members concierge service and “easier access to local primary and specialty care providers and the latest digital tools for navigating their health care needs” (link).
Similar to their national rivals, regional health plans are forming partnerships and alliances to drive cost-effective management of the total care of the member. Often, regional health plans manage their custom formularies differently than their PBMs with varying objectives. Manufacturers may leverage these different objectives and form innovative partnerships. Regional health plans may need help to stay relevant in the changing healthcare landscape.