Moderating Risk for Health Insurers: They're Very Much In Charge and Will Stay That Way

When you listen to the health reform advocates, it's easy to conclude that the health insurance industry's days are numbered. Thanks to health reform, goes the logic, those malevolent insurers will no longer be able arbitrarily rescind policies of patients and refuse to pay doctors what they deserve. They're going to be defanged by empowered, organized and regulated provider organizations that, thanks to their enlightenment, accept insurance risk and reduce costs. As a result, they say, direct buyer-provider contracting will turn those evil insurers into hollowed-out utilities that are destined for the scrapheap.

The Disease Management Care Blog respectfully disagrees. There is considerable market demand for the intellectual and financial capital it takes to manage risk transfer. Insurers know that, and they're not about to let a hostile President armed with bad anecdotes from the broken individual market get in the way of their fiduciary duty to find the best quality at the lowest cost for their tens of millions of enrollees. For many insurers, then, notions like wellness, disease management, the medical home and ACOs are subject to the same tough greenshade scrutiny: show me the money.

Which is why the DMCB thinks this Hawaii Medical Service Association (i.e., Hawaii's Blue Cross Blue Shield or BCBS) press release is telling. By way of background, recall that Healthways has been working with HMSA for years. Based on positive outcomes such as this, HMSA has basically decided to completely outsource health, wellness, prevention and disease management - along with over a hundred employees - to Healthways. The contract can't be a small one and may be one reason why the company continues to hold its own.

Which leads the DMCB to two lessons for the Healthways-style wannabe ACOs, medical homes and care management companies vying for a piece of the "risk" action:

Show you can really and meaningfully reduce risk and increase quality and only then will you succeed. For example, the Patient Centered Medical Home (PCMH) has begun to show some mojo in this regard, and if the initial success continues, it will be rewarded in more and more settings.

What is given can be taken away. Healthways learned that lesson bitterly years ago thanks to another BCBS plan. While the DMCB is not privvy to the details, it expects HMSA will aggressively monitor how its partner is performing on an ongoing basis. As a result, the company will need to prove itself on an onoing basis .... or else.

Doesn't sound like the health insurers are on the run at all.