Priority Health finds a partner to offer self-funded health benefits
May 02, 2024
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.
Source: Crains Grand Rapids Business