The Nexus of Payviders

By Clive Riddle, October 16, 2015

To what degree will the mega-merged health plans dominate the landscape in the balance of this decade? We’ve recently discussed the topic: will health plan start ups and provider sponsored plans fill the competition gap? We noted then, that the airline industry demonstrated opportunities that might apply in the current health plan environment,  “where the post-merger environment after established airline joined forces didn’t prevent the emergence or growth of carriers like Southwest, Jet Blue, Virgin America  and many others.

It’s looking more and more like the gap won’t be significantly filled by co-ops, with theKentucky Health Cooperative being the latest co-op to bite the dust. Much attention, and Wall Street dollars, is being given to the venture-capital backed startups. But it remains to be seen if they will take over the world or suffer the fate of a number of the co-ops.

In the meantime, regional independent plans, a large portion being provider sponsored, have much more of a track record and maturity to fall back on. A Reuters article this week, As U.S. insurers aim to get bigger, hospitals eye health plan entry, discusses established integrated delivery systems such as Kaiser and Geisinger, as well as the re-entry into this business by hospital companies such as Tenet, who now owns six health plans with about 100,000 members. Companies like evolent health are also covered, who are doing big business working with hospitals on developing new plans and risk-bearing networks.  

During the course of 2015, a term emerging into the lexicon around the country has been “Payvider”, which hopefully is self-explanatory. Let’s listen in a discussion about Payviders from Cathy Eddy, President of Health Plan Alliance:  

“….we met with the research firm KLAS. They are conducting a survey with “Payviders,” or health systems that have their own health plan.  This is a new term for a concept that has been around for more than 30 years, but seems to be gaining traction again as more providers move into value-based reimbursement (don’t call it capitation – that is so 90s), and more are leveraging their existing health plan, partnering with one, or even starting a health plan. I’ve been working in the space between payers and providers since 1982 and running the Health Plan Alliance for nearly 20 years.  What seems different now is the level of strategic alignment between the plans and their provider sponsors.  The expertise that exists in a health plan is a great (essential? necessary? logical?) resource for a health system that is moving into Population Health, establishing ACOs and negotiating contracts for value-based payments and incentives. Many of the competencies it takes to run a health plan are critical elements for health systems that are taking on risk.”

The Health Plan Alliance represents almost fifty provider-sponsored and independent health plans, that range in size, from less than 50,000 members to more than I million members, and operate in all lines of business, including commercial, Medicaid, and Medicare. Perhaps they are the nexus of the source of competition in the health plan industry for the rest of this decade.