LifeHealthPro

This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers,click the "Reprints" link at the top of any article.

We've got your doctorStanding out in the age of PPACA

Marketing experts usually advise clients to "segmentthe market" and find a way to appeal to the preferredmarket segments by setting themselves apart fromthe competition.

For health insurers, the Patient Protection andAffordable Care Act of 2010 (PPACA) could makestanding apart from the competition complicated.

Joseph Berardo Jr., the president of MagnaCare, acompany that develops provider networks for healthplans, believes that he has the answer: providernetworks.

Some insurers could set themselves apart with broad networks, he said, and others could set themselves apart with"micro networks," or "pods."

"It's all going to center more and more around integrating care management," Berardo said. "The whole goal is just tomanage care better."

PPACAA lawsuit, a House Republican repeal bill or a House Republican budget bill could still kill PPACA dead before Oct. 1,

JANUARY 23, 2013 • REPRINTSBY ALLISON BELL

Joseph Berardo Jr.

We've got your doctor | LifeHealthPro http://www.lifehealthpro.com/2013/01/23/weve-got-your-doctor

1 of 3 2/28/13 10:53 AM

when PPACA exchanges are supposed to start selling individual and small group coverage that will begin to takeeffect Jan. 1, 2014.

Right now, however, the big health insurers, benefits brokers and benefits consulting firms seem to be proceeding onthe assumption that the exchanges are coming, along with the PPACA employer health coverage mandate; thePPACA tax penalty to be imposed on individuals who fail to own "minimum essential coverage"; a requirement thatall health plans offer a basic, state-created "essential health benefits" (EHB) package; a requirement that plans issuecoverage without taking personal health information into account; tight restrictions on use of personal healthinformation in coverage pricing; and a full ban on annual and lifetime benefits caps.

PPACA already requires carriers to spend 80 percent of individual and small group premiums on health care andquality improvement efforts, and it already requires carriers to jump through disclosure hoops when they increaserates more than 10 percent.

Top executives at UnitedHealth Group Inc. (NYSE:UNH) and WellPoint Inc. (NYSE:WLP) have said that all of thePPACA-related change and uncertainty will lead their companies to be relatively conservative about how they pricenew business over the next year or two.

If health insurers and agents are afraid of underpricing coverage and getting stuck with big, PPACA-related losses,and they can't tinker very much with the list of benefits offered, how do they set themselves apart?

PPACA does still give insurers some flexibility when it comes to deciding which doctors and hospitals to include intheir networks.

PPACA and state laws and regulations do impose minimum provider access requirements.

PPACA Section 1311 requires that a health plan qualified to sell coverage through the new PPACA exchange system"ensure a sufficient choice of providers" to comply with the network adequacy provisions in Section 2702(c) of thePublic Health Service Act."

A qualified plan also must "include within health insurance plan networks those essential community providers,where available, that serve predominately low-income, medically-underserved individuals," and the plan must meeta plan accreditor's "network adequacy and access" standards along with other accreditation standards.

But, as long as exchange plans meet the minimum access standards, and as long as the networks function wellenough that the plans earn reasonably high scores on plan enrollee satisfaction surveys, plans can have providernetworks that are as big, as small, as traditional, or as radically innovative as plans want.

The plans sold outside the exchange system can offer any networks large enough to meet the state and federalrequirements in effect

The podsIn theory, a plan could offer a network in which every doctor had a great fish tank, orevery pediatrician had a Wii in the waiting room.In the real world, plans tend to offer big networks or small networks of providers who get high marks for quality, priceand efficiency.

In the long run, another selling point might be how well a plan's network, or a super-preferred pod within the main

We've got your doctor | LifeHealthPro http://www.lifehealthpro.com/2013/01/23/weve-got-your-doctor

2 of 3 2/28/13 10:53 AM

© 2013 LifeHealthPro. A Summit Business Media publication. All Rights Reserved.

network, is integrated.

PPACA itself and an earlier law, the Health Information Technology for Economic and Clinical Health (HITECH) Act,include provisions that are supposed to encourage providers to work together to get patients good care as efficientlyas possible.

The HITECH Act, for example, provides bonuses for doctors and hospitals that treat Medicare and Medicaid patientsthat use electronic health record (EHR) systems, to increase the likelihood that the providers will be able to useelectronic systems to coordinate and analyze care.

A major PPACA pilot program encourages Medicare providers to join to form "accountable care organizations"(ACOs), or integrated provider groups that are supposed to work closely together to coordinate a patient's care andshare in access to incentive payments tied to the quality and efficiency of the care provided.

For now, "I don't think there are many true ACOs," Berardo said. But, in part because of the influence of PPACA, hesees hospitals integrating with providers, and providers integrating themselves into independent practiceassociations (IPAs).

"All of these activities are going on feverishly," Berardo said.

The physician-led pods tend to be more nimble than the hospital-led pods, and the physician-led pods tend to bebetter at holding costs down, Berardo said.

Hospitals that acquire physician practices often increase the practice fees, and pressure to fill hospital beds mayconflict with the goal of minimizing use of inpatient hospital care, Berardo said.

So far, Berardo has not seen any signs that the narrower networks are interfering with patients' access to care. Thepods have been using urgent care clinics to fill in gaps, and the providers within the pods have been using nursepractitioners and physicians' assistants to increase capacity, Berardo said.

Unlike some health reform ideas that seem to have more of a presence in seminar slideshow presentations than inthe health insurance market, the narrow network is getting buyers' attention.

Employers and brokers often ask about pods, and the concept is particularly popular with large employers, suh asschool districts or municipalities, that are looking for ways to set their plans apart, Berardo said.

See also:Corporate Health Strategies: The Way to Leverage Health Care Reform

The Hole in the Ceiling Leaks Upwards

HIAA To Hold Technology Conference

We've got your doctor | LifeHealthPro http://www.lifehealthpro.com/2013/01/23/weve-got-your-doctor

3 of 3 2/28/13 10:53 AM