• Mountain States Adds an Insurance Arm

    Lola Butcher Nov 06, 2013

    Mountain States Health Alliance’s new insurance company, CrestPoint Health, is at the center of the organization’s growth strategy—to help counter anticipated declines in inpatient revenues. 

    If Mountain States Health Alliance (MSHA), a four-state health system based in Johnson City, Tenn., fulfills its 10-year vision, the organization will see inpatient utilization drop by as much as 30 percent.

    Yet the health system will have a larger footprint than it does today. And it will be thriving because of a multi-pronged strategy: 

    • Increased efficiency through the use of Lean management
    • Healthier communities because of population health management
    • Lower costs through an accountable care organization (ACO) model 
    • A new revenue stream coming from its insurance company

    Profits from its CrestPoint Health Insurance Co. will be reinvested, rewarding physicians who provide high-value care and supporting hospitals so they can maintain their essential services. 

    “The insurance company is not there to become the next WellPoint, the next United, or the next Aetna. It’s there to be a strategic asset,” said Rob Slattery, president and CEO of Integrated Solutions Health Network (ISHN), CrestPoint’s parent organization. “It is a financial asset, but we intend to use it for the right purpose, which is to ensure that we have a strong health system that meets the needs of the people whom we serve and do so in accordance with Triple Aim objectives.”

    Alignment to Triple Aim Objectives

    Launching a Dual ACO-Insurer Strategy 

    MSHA has 13 hospitals, more than 1,200 physicians on its medical staff, and annual revenues of $1.2 billion. It serves 29 counties in Tennessee, Virginia, Kentucky, and North Carolina. Its insurance arm, CrestPoint Health, is based in Johnson City, Tenn. 

    After a visioning process four years ago, MSHA leaders recognized that the health system’s traditional business model, which depended on increasing inpatient utilization, would not sustain the organization in the long term. As health care moves from fee-for-service to population health management, inpatient revenues will decline even as providers’ responsibilities increase.

    Unique brands. In response, MSHA created Integrated Solutions Health Network (ISHN) as the home of a business model built on two new entities: 

    • A community-based ACO called AnewCare Collaborative: The ACO’s job is to facilitate the move to population health management, shared savings, and bundled payment contracts. This is accomplished by partnering with providers, particularly patient-centered medical homes, to help private and government payers deliver value-based healthcare products and services. 
    • CrestPoint Health, a licensed insurance company and third-party administrator for self-insured clients: CrestPoint’s aim is to be a forward-thinking payer, partnering with AnewCare, other ACOs, and value- oriented provider groups.

    The system’s executives intentionally avoided connecting MSHA’s own name to these two entities (e.g., calling the insurer Mountain States Health Insurance Company) because they want CrestPoint Health and AnewCare to seize market opportunities wherever they can be found. “We chose to brand these as independent entities, recognizing they could become the brands that could be adopted by our other partners who integrate into our model in the future,” said Slattery.

    That creates the opportunity to bring dollars from other communities alongside the investments made by MSHA, which benefits both MSHA and its regional partners. “Our goal is to take the gains that we derive through our insurance products and redistribute those gains equitably throughout the network,” he said.

    Rob Slattery, Mountain States Health Alliance

    While CrestPoint will partner with the AnewCare Collaborative, the ACO has its own agenda to work with a range of government and private payers. AnewCare, which is in the Medicare Shared Savings Program, is exploring a partnership with Aetna to serve large group commercial accounts that require a national network, Slattery said. In addition, AnewCare has recently partnered with Sentara’s Optima Health to launch commercial health insurance exchange products in southwest Virginia. The strategic partnership will align with current Medicaid ACO efforts that are already under way in the area. 

    Investment to date. MSHA’s board supported the creation of ISHN, including the ACO and the insurance company, with a capital investment of just under $15 million. Of that, $8 million was allocated to start the insurance company, including $2.5 million to acquire the license. The remainder of the money was used for innovations, including medical home development, care transition programs, care coordination and the launch of a bundled payment initiative, and building infrastructure (e.g., network development, marketing, sales, operations, medical management, and informatics). Money was also used to attract seasoned health plan executives to provide the expertise needed to build the new organizations quickly.

    The first year of CrestPoint operations cost about $7 million, which included product development, branding, marketing, and sales. The insurance company is expected to break even in its third year of operations, Slattery said. 

    Building the Insurance Company 

    CrestPoint Health was created in early 2011 to serve as a third-party administrator for the 15,000 employees and dependents of the MSHA system. Goal number 1: Start building the infrastructure needed to accept risk and gain experience with ways to improve employee health—and, in doing so, lower the costs of care.

    Journey of Transformation

    First steps. To begin, the startup company arranged an outsourcing agreement with another health plan, SummaCare Health Plan in Akron, Ohio. This arrangement—known as business processes outsourcing— currently provides all claims processing, customer service, utilization management, case management, and disease management for CrestPoint. “This arrangement allowed us to come to market quickly, and I didn’t have to make the investment in staff and technology to bring up a health plan from scratch,” Slattery said.

    When the Centers for Medicare & Medicaid Services announced its ACO programs, CrestPoint decided to take the next step. Moving quickly, it acquired a shell license that allowed CrestPoint to sell insurance in Tennessee. In January 2013, the company entered the Medicare Advantage market with a fully insured product in a contract directly with CMS.

    The near future. The next step is to market CrestPoint third-party administrator services—processing claims and providing other employee benefit services—to employers within its region as they gravitate away from relationships with insurers. “There are a lot of advantages, including cost savings, that employers can derive through moving from fully insured to self-funded under the guidelines of the Affordable Care Act,” Slattery said.

    Beyond that, the company plans to expand into insurance marketplace products in 2015 in both Tennessee and Virginia. And it is evaluating opportunities to partner with other health systems to create regional networks that support ACOs for the managed Medicaid population in Tennessee. “We are looking to leverage CrestPoint to grow our government-sponsored business, whether it be Medicare, Medicaid, or the exchanges,” Slattery said. “I think this will become our sweet spot going forward.”

    CrestPoint’s goal is to have 1 million members within five years. That means building network affiliations and offering insurance products throughout the southeast region. “To be sustainable, we need to have a broader footprint, and we recognize there are going to be other health systems that will want to plug into the infrastructure we have built,” Slattery said. 

    Making Rapid Progress 

    In FY12, which was CrestPoint’s first year of operation, the insurer was able to maintain a level healthcare spend for the 15,000 MSHA employees and their dependents—while the national trend was increasing about 8 percent. In FY13, healthcare costs are again projected to remain flat or potentially decrease. 

    “We’ve got a story now to tell to other self-funded employers in the market,” Slattery said. “I think it makes the national carriers very nervous.”

    That said, starting a new insurance company that is pivotal to the future fortunes of the entire MSHA system is not an easy feat. 

    Earning trust. Introducing a new company into the competitive health insurance market is its own challenge. To succeed, CrestPoint needed to demonstrate that it was an organization that physicians and Medicare beneficiaries could trust.

    After just nine months of operations, the company hired an external auditor to conduct two surveys. Physician partners were asked about their satisfaction on claims payments and other interactions with CrestPoint, and members were asked about customer service. Scores fell in the high 80s and low 90s on a 100-point scale. “In some respects, we were above, and in other respects, we were on par with our competition, which is remarkable for a startup plan,” Slattery said. “That was a win because it helped build confidence among senior management and the board as well as the community.”

    Striving toward population health. An even bigger challenge has been introducing population health management to MSHA employees and their dependents. CrestPoint’s strategy is to create accountability for the physicians who treat plan members and for the members themselves.

    For starters, MSHA narrowed employee health plan choices from about 15 options to two products, both of which are high-deductible health plans with integrated pharmacy benefits and health savings accounts. To get the lowest premium in one of the options, plan members must select a primary care physician, complete an online health risk assessment, visit the physician for a more detailed risk assessment and, if health issues are present, develop and stick with a care plan.

    To improve health outcomes, CrestPoint’s case managers work directly with patients with chronic conditions, behavioral health issues, or catastrophic situations (such as spinal cord injuries) to make sure care is coordinated for best outcomes and high efficiency. “Our medical management staff works with the physicians to ensure that we have no gaps in care. They help make sure health plan members are compliant with their care plan, taking their medications, and staying on track,” Slattery said.

    While he believes most plan members understand those changes are needed to control healthcare costs, not all have embraced the requirements enthusiastically. “In a lot of respects, folks are not open to change because it can be really difficult, and it gets downright personal,” he said. “But I think there’s also a recognition that if we don’t, as individuals, start to become more accountable, then whatever we do on the delivery system side is, ultimately, not going to be successful.”

    Going for Speed

    MSHA’s approach to entering the insurance industry has been driven by a focus on “speed to value.” This required hiring executives with experience in provider networks, medical management, underwriting, and other key skills—rather than expecting health system executives to build an insurance company, said Slattery, a former executive at BlueCross BlueShield of Tennessee. “Recognizing that things weren’t going to slow down, that they were going to move faster than most people thought, we brought in external expertise,” he said.

    That need for speed also prompted ISHN to acquire a shell license rather than embark on the time-consuming process of applying for a state insurance license from scratch. An external firm was hired to identify an available shell license in Tennessee. ISHN was able to acquire the license and receive approval from state regulators within six weeks.

    It also led ISHN to contract with SummaCare rather than build its own capacity to handle benefits administration and related tasks. Initially, SummaCare provided the informatics platform that allowed analysis of claims data to understand the health status of MSHA employees, conduct predictive modeling, and profile the physician network to understand how physicians performed on quality and cost measures. Fairly quickly, however, ISHN’s need for a different approach to data analysis has become apparent. “We are acquiring our own capabilities that put us on a cloud-based platform that could allow us to deploy our capabilities across multiple markets,” Slattery said.

    Going forward, he expects ISHN will bring other functions in-house. But the benefit of initially outsourcing those functions is that ISHN had immediate access to expertise. “It has allowed us to really execute efficiently on these new issues as we bring them into our business model to make sure that we are at a level of excellence without falling down,” he said.

    Serving as a Beacon

    MSHA’s vision does not include acquiring a broad range of physician practices and other medical assets. Slattery believes mutually beneficial contractual relationships work better. “That really allows us to get to a better value proposition, yet maintain a level of independence and productivity that we wouldn’t get in a Kaiser-like, all-employed health plan model,” he said. “If we can do this right, I think this is going to be a model that could be a beacon for other communities, and we can evangelize this way of bringing greater value to communities.”

    Lola Butcher is a freelance writer and editor based in Missouri. 

    Interviewed for this article: Rob Slattery is president and CEO, Integrated Solutions Health Network, Johnson City, Tenn.