Priority health has partnered with a third-party administrator and plans to begin offering a new option for employers that self-fund their employee health benefits.
Grand rapids-based priority health expects to launch a self-funded option through a partnership with healthcare management administrators inc., a bellevue, wash.-based third-party administrator, for coverage that starts jan. 1, 2025. Priority health selected grand rapids-based advantage benefits group as one of the first benefit consultants to provide quotes to employers for self-funded coverage, starting in june.
Partnering with the third-party administrator follows priority health’s strategy to bring to market coverage options for employers to consider as they seek alternatives to better manage their employee health care costs.
“health care is complex,” said rick abbott, priority health’s senior vice president for employer solutions. “we have a responsibility as a health plan to better organize how benefits are offered.”
Self-funding allows employers to customize their employee health benefits. Employers can carve out certain areas such as pharmacy or stop-loss coverage for self-funding. A third-party administrator handles claims for self-funded plans.
The third-party administrator partnership stems from a “listening tour” with benefit brokers and agents that abbott undertook across michigan after he joined priority health in july 2023. Agents and brokers were “very loud” and “very clear” in wanting an alternative from priority health to present to employers who self-fund their employee health benefits or want to consider the option.
“this came largely from my first few months on the road with agents saying, ‘look, if you had this product offering, this is something that we would want to work you on,’” abbott said. “when something comes through that loud and clear multiple times, it’s something we have an imperative to act upon.”
The 1.3 million-member priority health presently offers self-funded benefits through an administrative services organization. Partnering with a third-party administrator gives priority health a new vehicle to better meet an emerging demand for self-funded health benefits.
“it’s definitely a little bit of a different direction for us, but I think it aligns well with where the market is and shows that we can be nimble and agile and responsive when we need to be,” abbott said.
In an email to crain’s grand rapids business, ceo and president praveen thadani said that priority health, which is majority-owned by corewell health, “has prided itself on a strong self-funded offering rooted in both our place as an integrated delivery system as well as an innovator and pioneer in the market.”
“however, we also have a number of agent and broker partners with progressive benefit strategies, and for those looking for full flexibility, we want to be able to provide a solution, as well. This approach allows us to meet the needs of our customers and our market,” thadani said.
The third-party administrator partnership will target employers with 100 or more employees.
Abbott publicly discussed the third-party administrator partnership, as well as plans to offer employer benefit packages that steer members to high-quality medical “centers of excellence,” in a presentation at advantage benefits group’s recent annual health benefits seminar in grand rapids.
He further detailed both initiatives in a follow-up interview with crain’s grand rapids business.
targeting quality and cost effectiveness
In designating centers of excellence, priority health intends to offer employers tiered benefit packages that are designed to steer consumers to hospitals and other care facilities that offer the highest quality and best price. The initiative will start with qualifying centers of excellence for spinal surgeries and hip and knee replacements, which are three procedures that “should be done very, very well at a cost-effective price,” abbott said.
Using third-party and internal cost and quality data, priority health plans to begin designating the first tier one centers of excellence and notify qualifying hospital and ambulatory surgery centers.
Under a three-tiered benefit plan, priority health members would pay less out of their pocket when they opt to have a procedure performed at a designated center of excellence. The savings generated by directing consumers to care providers that offer the best value of cost and quality and record fewer costly complications can more than cover the reduced out-of-pocket costs for members, abbott said.
Priority health believes “we can get people to the right place by using benefit design and products and solutions far more effectively,” he said.
“you get a better experience, higher quality surgery and the cost is less not just for you but for your employer and the industry as well,” he said. “by making the whole health care system more efficient, we’re actually able to share those savings back with people and their employers to help drive that efficiency. If this works, over time what you’ll see is providers competing to be in that tier one, wanting to improve their quality, wanting to make sure they’re cost efficient because it’s a means by which they can get access to a segment of the population that we’re trying to drive through there.”
Thadani notes that cost and quality can differ widely between facilities for the same procedures. Health plans “are in a unique position to provide a different experience for members by leveraging our vast data and analytic assets to curate the network more precisely with respect to quality first and then cost,” thadani said.
“in doing so, we can help members get to the right care at an affordable price. Our centers of excellence product, focused initially on knees, hips and spines, will drive member outcomes, quality and affordability, while also rewarding providers who are providing higher-quality, cost-efficient care,” he said.
Priority health launches the centers-for-excellence program jan. 1, 2025. The health plan continues to work out the financial specifics of the tiered benefit levels, “but there will be some level of subsidy” for procedures “in return for making a higher value choice, which removes the financial burden to an extent from our members,” abbott said.
Priority health plans to designate care providers annually in at least one new procedure for a center of excellence. Oncology, cardiology and organ transplants are among the procedures for which the health plan intends to designate centers of excellence, abbott said.
The initiative aims to market priority health in a new way other than relying on the large care network and discounts from care providers that health insurers use when pitching employers.
“we want to compete in a different way,” abbott said.
