The structure of the American health system pits insurance health plans and healthcare providers against each other when it comes to income.
The ongoing tension between insurance carriers and healthcare providers over reimbursement rates has resulted in what Cigna President and General Manager for Southern California and Nevada Eugene Rapisardi called a “win-lose situation.” But he said he believes the health plan company has a win-win solution—its exclusive Select plan with Irvine-based St. Joseph Hoag Health and two providers serving the San Diego and Los Angeles markets.
“It’s a very unique hybrid risk arrangement in which each partner participates and is incentivized to improve quality and outcomes,” Rapisardi said, and “nobody takes more burden than the others, and we are all equal partners.”
Those partners, according to Richard Afable, executive vice president of St. Joseph Health Southern California region and chief executive of St. Joseph Hoag, include “the health system, insurance company, employers and employees [who share] aligned incentives for wellness.”
The global health plan provider generated $39.7 billion in revenue last year, recently trading at about $175 per share for a $45 billion market cap. It provides medical, dental, disability, life and accident insurance and related products and services. It has 13.7 million medical insurance customers.
St. Joseph Hoag and Cigna officially announced the joint venture in January 2016, offering Orange County employers HMO health plans branded St. Joseph Hoag Health Select and exclusive provider organization EPO—the health system’s version of a PPO—branded St. Joseph Hoag Flex.
The Select network includes seven hospitals: Hoag Newport Beach; Hoag Irvine; Hoag Orthopedic Institute Irvine; Mission Hospital-Mission Viejo; Mission Hospital-Laguna Beach; St. Joseph Hospital-Orange; and St. Jude Medical Center in Fullerton; along with eight medical groups representing approximately 1,700 physicians. The plan also provides access to Children’s Hospital of Orange County.
Select has approximately 30,000 members, including employer Irvine-based device maker Masimo Corp. But Rapisardi said there were challenges in marketing the new plan.
“The first thing you have to do was to make sure the market understands what you launched—you had to educate brokers, consultants and perspective clients,” he said. “We also learned it was hard to market a product in Southern California that [is only available] in Orange County. I would have employers come to me saying, ‘We love what you are doing, and we would love to buy into it, but we have employees in L.A. and San Diego.’”
So Cigna expanded its Select footprint this year, adding San Diego-based Scripps Health in January and El Segundo-based HealthCare Partners in February. It launched the Scripps Select HMO and HealthCare Partners Select HMO plans in April.
Rapisardi said the model is “an entirely new type of healthcare ecosystem” designed to promote better health and affordability, provide better outcomes and care experiences and create long-term, sustainable savings.
“The lines are becoming blurred between providers of care, payers, and I will add employers of people as it relates to their health. We are increasing crossing over to other areas to provide greatest value. That is the best possible outcome and lowest possible cost,” Afable said.
He pointed out that an important element in working hand in hand is understanding what each party brings to the table, and what each does best. For example, he said that in areas such as prevention and disease management, healthcare providers can do a better job than health plans based on existing provider-patient relationships.
Plans sold through the Select model include medical, behavioral health, medication management and health coaching services. Employers also have the option to add Cigna dental, vision, group life and disability plans.
Cigna is talking with other providers to set up the “more intensified [joint venture]” in other states.
When asked why Southern California providers are early adopters of the Select model, Rapisardi said the region is more conditioned to working collaboratively to deliver care.
“What we are doing here transcends legislation,” he said. “I believe we are actually reforming healthcare by collaboration. The importance of wellness, [patient engagement] and living a healthier lifestyle.”
