With less than two years in existence, CoOportunity Health serves as a microcosm of several national trends in healthcare. Iowa’s newest managed-care plan has had the advantage of starting from scratch just in time to build off the momentum of health reform.
Marketing in a state sorely in need of health insurer competition, CoOportunity is a not-for-profit Consumer Operated and Oriented Plan (CO-OP), as prescribed by the Patient Protection and Affordable Care Act. Increasing competition is one of the overarching goals of the CO-OP provision.
“We were one of the first seven of the 24 CO-OPs that were funded,” says CoOportunity CEO Cliff Gold. “We have two low-interest loans: one for the start up and one for capital, for a total of $112.6 million.”
What’s significant about the start up is that CoOportunity Health secured federal loans early last year. And the timing was fortuitous.
On January 1, 2013, the government’s sequestration deal abruptly ended the CO-OP program, denying any new investment. But CoOportunity was among the insurers able keep their already-secured loans. Essentially, any CO-OP hopeful that didn’t gain a federal commitment prior to January 1, lost out simply because of bad timing.
With federal backing, CoOportunity created an initial PPO product in early 2012.
Last month, however, Gold announced CoOportunity’s new narrow- and tiered-network products in partnership with the University of Iowa (UI) Health Alliance, a local provider collaborative that launched just a year ago. Fifty hospitals and more than 160 clinics in the state participate.
“Provider-to-provider collaboration is paving the way for provider-to-payer collaboration,” says Dan Kueter, executive director of the University of Iowa Health Alliance. “Unique benefit and incentive alignment between patient, payer and physician is unique and appeals very strongly to provider organizations.”
Kueter says such alignment is a necessity to move healthcare to the post-reform era.
Preferred UI Health Alliance—the narrow-network product—offers emergency care coverage outside the group, but all other care is delivered exclusively through the UI alliance of providers.
“The distinction with the preferred product from anything that’s been done in the past is the breadth of the University of Iowa network,” Gold says. “We’re able to go border to border, east, west, north and south.”
The tiered-network Choice UI Health Alliance design includes varying benefit levels based on provider selection, but with open access. Members choosing UI providers pay less out of pocket.
“It’s a PPO variance, but you get your best benefit by going to the select group of providers,” he says.
Observers often question whether the trending narrow- and tiered-network designs are nothing more than the HMO model of the 1980s. Thanks to improved information technology and electronic medical recordkeeping, times have changed, and Gold says today’s insurance products are indeed different.
“The entire process of care management is completely different than it was in the HMO days where there were abuses of care management,” he says.
Kueter says the experience with the new innovative network designs doesn’t feel as restrictive for patients as HMO networks once did. Although from an insurers’ standpoint, the designs have similarities, the way patients and providers interact is more collaborative with care teams rather than as siloed clinicians.
“The HMO era featured payer dominated care management, and I’m not even sure you can call it care management, but payer-controlled allocation of care was an outcome of the era,” Kueter says. “What we have here is provider-controlled care coordination and collaboration that is provider-to-provider, without heavy handed imposition of extensive policy and allocation and perhaps even at times constricted access imposed by payers.”
HMOs of the past weren’t supported by the patient/member data needed by providers to truly manage care comprehensively. As a result, insurers looked closely at cost data—which they had—with little quality or outcomes information on which to base decisions.
Limited-network designs aim to better leverage total value propositions and funnel members to high-performing providers. The providers are then supported with data to drive better care.
CoOportunity will sell its products on the federally operated Iowa exchanges as well as in the open market. Gold says six insurers submitted Qualified Health Plan applications for the individual and SHOP exchanges, but CoOporunity appears to be the only plan that has significant geographical reach, aiming for 75% of the counties statewide.
He says Coventry could also cover a large area, but until the final determinations are made at state level, it’s too soon to tell which plans will be direct competitors. Interestingly enough, Wellmark Blue Cross and Blue Shield, currently serving nearly 90% of the individual and small group segments in Iowa, has not applied for exchange participation. Overall, Wellmark covers 2 million lives in a state of just over 3 million people.
Gold says the uninsured rate in the state is between 9% and 11%. As part of its loan application process, CoOportunity stated that it would cover an estimated 50,000 enrollees in the first three years of operation, which “we think is doable,” he says.
No doubt many of the members will sign on through the Iowa exchanges, which by all indications from the state division of insurance are in position for the October 1 launch.
“We were assured the exchange will open up as scheduled, but that said, how smooth and friendly it will be, who knows—that will be an IT challenge,” Gold says. “We’re hearing the exchanges, come hell or high water, will be open October 1.”
CO-OPs like CoOportunity are not-for-profit, member-run health plans that follow the same rules as other insurers; however, they must reinvest any excess revenue into benefits and lower premiums. The startups will most likely aim to compete on price inside and outside of the insurance exchanges. Each must earn a license from the state and set up a board of directors that includes plan members.