WellStar Health System and Piedmont Healthcare are dropping key parts of their joint health insurance plan after just two years of operation, pulling back from what was seen as a bold move into the insurance business.
Citing costs, the two metro Atlanta systems have told medical providers they’re discontinuing their Medicare Advantage plan for next year. The current 12,000 Medicare beneficiaries will have options to switch to another Advantage plan or to receive care in the traditional program.
The health plan will also end its offering for employees of Piedmont and WellStar at the end of the year. About 35,000 employees and dependents were estimated to be eligible for coverage from the Piedmont WellStar HealthPlans at the launch of the program. They will be served by other health insurers in 2016.
The only part of the Piedmont/WellStar health plan that will still function will be the segment that offers coverage to employers.
WellStar and Piedmont leaders, at the venture’s outset, said the health plan was a new avenue to improve the quality of medical care and lower costs.
But the health plan told providers the Medicare offering is ending “largely because of an inability to generate a large enough membership and the required premium revenue needed for long-term operations and sustainability. Further, the regulations around [Medicare Advantage] are complex and much more costly to comply with as a small scale health plan than … anticipated.”
In a joint statement to Georgia Health News, WellStar and Piedmont said the health plan was successful in “improving the patient experience and quality of care.” The organizations added that the insurance plan kept health care cost trends per member flat for the past 18 months.
“Both Piedmont and WellStar remain committed to the idea that we can achieve better health for the communities we serve,’’ the statement continued, adding that the plan will help Medicare members find a replacement when Medicare open enrollment begins next month.
Health plan members are being notified of the changes.
More hospital systems nationally have looked to offer insurance products. Provider-owned plans cover less than 10 percent of the entire privately insured market, but membership is growing, Modern Healthcare reported earlier this year.
But many health systems are taking a cautious approach, at least partly because they don’t want to repeat hospitals’ financial losses in the 1990s, when many jumped into the risk business, Modern Healthcare reported.
Another metro Atlanta health plan, run by Promina, also failed in the 1990s.
The insurance business “is a tough business in all facets,’’ said Graham Thompson of the Georgia Association of Health Plans, an industry trade group. “It’s complicated.”
Still, Thompson said he expects similar ventures from hospitals in the future.
This article was written in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation. Andy Miller is CEO and editor of Georgia Health News.
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