As the Affordable Care Act (ACA) continues to influence and change the healthcare landscape, innovation in the method of delivery of healthcare is at the forefront of the shifting dynamic between healthcare providers, insurance carriers and patients. The ACA has paved the way for healthcare systems to expand their roles beyond simply providing healthcare to patients, and one manner in which this is occurring is the development of self-funded insurance programs, in which the healthcare system functions as the insurer and bears the risk of any member health care costs. Previously, self-funded insurance programs have primarily been the domain of large companies with thousands of employees, not smaller healthcare systems. The self-funded hospital insurance plans cut out the insurance carrier as a middle man and centralize all aspects of care, significantly driving down insurance premium costs for participating members.
Self-funded hospital insurance plans are just one of the latest developments in a series of trends moving towards centralized health processing, and are among a growing number of efforts to provide better access and more affordable care. Many hospital-owned insurance plans are growing to provide insurance products not just to their own employees, but to outside employers as well. While many of these hospitals continue to participate with private insurance companies, they are increasingly expanding the reach of their provider networks to compete with those companies. With private insurance premiums, deductibles and co-payment amounts steadily increasing, hospital-based insurance plans, through which hospitals are able to mitigate employer and patient payments, will likely become more and more popular.
Integrated delivery systems offer reduced insurance costs for hospital-based products and services, but are also associated with limited provider choice outside of the hospital system. While decreased costs may outweigh choice limitations for prospective patient members, such limitations could mean more drastic consequences for practitioners not affiliated with any hospital systems. The “in-network” patient cost-sharing responsibilities for hospital-based insurance plans are normally significantly less than those with any other option offered, and these price differentials encourage members to utilize hospital providers, instead of continuing to maintain relationships with private practitioners.
While hospitals are fighting to gain and sustain a patient base, physicians who are part of large group practices and organizations will have an advantage over individual practitioners. Larger physician practices will be able to maintain leverage with health systems in their practice area, encouraging even those hospitals looking to centralize their provision of care to establish mutually beneficial relationships with the larger practices in their geographic area, offering hospitals broader access to patients.
Hospital systems participating in the self-insurance trend are focusing on customer service, ensuring smooth transitions for members, as all critical functions are performed centrally. This process could also enable more efficient data and evidence based management, in line with the ACA. Hospital-based insurance plans also incentivize hospitals to provide better care to their patients, as any cost savings, such as savings created by preventing illness or managing chronic disease through preventative and primary care, are retained by the hospital itself. Contact Frier Levitt to speak to an attorney.
