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‘Virtual Health Plan’ to Target Medical Costs

Scripps Health is working with Cigna to launch a “virtual health plan” giving the San Diego-based health care system financial incentives akin to those Medicare envisions as it shifts toward value-based medical care.

Called Scripps Select, the venture would launch in early 2017 as a co-branded commercial product, people familiar with it said. Cigna would arrange for the medical care of Scripps patients traveling outside the San Diego area.

Spokespeople for both companies acknowledged the product but declined to discuss it because they were not ready to make details public.

Officials with the California Department of Insurance and the state Department of Managed Health Care said neither company has filed any paperwork about the product, which may suggest it will be marketed to local employers not as a health plan but as “self-funded” coverage outside the state’s insurance oversight.

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Partnership Model

The arrangement appears similar to other recent collaborations, some of them local, in which networks of hospitals, physicians and other health care providers partner with insurers to improve medical outcomes while also lowering costs. The two companies introduced a partnership with similar aims last year.

Gene Rapisardi, president and general manager of Cigna in Southern California and Nevada, compared Scripps Select to the so-called accountable care organizations Sharp HealthCare has introduced since 2011 and which now serve a total of about 65,000 enrollees.

Speaking at a Sept. 28 meeting of health care and insurance professionals assembled by the North San Diego Business Chamber, Rapisardi said such collaborations — “virtual health plans,” he called them — bring together hospitals and insurers as equal partners with shared incentives to reduce unnecessary medical treatments while at the same time aligning their interests in the demonstration of improved care.

Expect more of these kinds of arrangements to be announced soon, he told the audience, as the health care industry prepares for the federal Centers for Medicare & Medicaid Services to move increasingly toward reimbursements based on value, taking into consideration hospital readmissions, as opposed to simply paying for services rendered.

“Look for those collaborations,” Rapisardi said at the meeting.

Scoring on Cost and Care

Early last year, Scripps, a nonprofit health care system with five acute-care hospitals, 28 outpatient centers and 15,000 employees in the San Diego area, announced it had collaborated with Connecticut-based Cigna on a program called Cigna Collaborative Care.

The program was new to local customers of Cigna offering their workers what is known as self-funded health coverage rather than conventional insurance. It was among seven programs statewide in which the insurance company would pay a local health care system financial incentives based on cost reductions and medical outcomes.

“If we do better than the market average, then Cigna will reward us with financial incentives, just like Medicare does with ACOs,” Scripps’ senior vice president of payor relations, Marc Reynolds, told the San Diego Business Journal in January 2015, using an acronym for accountable care organizations, which are health care provider networks aligned to coordinate patient care.

“But we don’t just have a cost score,” he continued. “Cigna scores us on cost and quality of care.”

Sharp spokesman John Cihomsky said employers have been slow to adopt the company’s commercial ACOs, which in some cases must be individually designed to interest a customer’s employees. The products remain “in their infancy stages” and, in terms of profitability, have achieved “mixed results.”

“In some instances we have done well both in enrollment growth and financial return and yet, in others, we have not,” Cihomsky said by email.

“The one thing we can say with certainty is that the metrics related to quality and costs have been improved,” he added.

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