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Cigna Collaboration Gives Scripps Testing Ground for Own HMO

Ask an executive at Scripps Health to describe what’s special about the company’s most recent collaboration with Cigna, and you’re likely to hear the same analogy Cigna uses: It gives the San Diego integrated health system a seat at the table in insurance negotiations with employers.

“Usually we’re downstream from a (health) plan that’s already sold a product,” said

Marc Reynolds

Scripps’ corporate senior vice president of payer relations, Marc Reynolds.

To take the seating metaphor a step further, what’s to stop Scripps from setting up its own table for negotiating with employers and their representatives on future health plans?

Answer: Nothing; in fact, the company is working to do just that.

Taking Control of the Future

This summer, Scripps intends to introduce its own line of HMOs, moving deeper into the realm of insurance and following the lead of one of its local competitors, Sharp HealthCare.

Viewed this way, the Scripps Select HMO product line Cigna announced Jan. 11 for launch April 1 is more than a forward-thinking, financial risk-sharing collaboration between a national insurer and a regional health-care provider. It’s also an important step by Scripps toward seizing greater control of its own future.

This was never an either-or proposition. The two companies’ collaboration leverages the Connecticut-based insurer’s network outside the region, and includes its life insurance, disability and other offerings. Thus, Scripps Select makes sense even if Scripps weren’t ramping up to sell its own HMO coverage.

Larger Trend

Scripps Select also aligns with a nationwide push for closer coordination between insurance companies and medical providers. It takes cues from the trend of value-based health care, in which payment is linked to medical outcomes, and from financial risk-bearing networks known as “accountable care organizations.”

For Cigna, the collaboration represents the third time it has worked closely with a regional integrated health-care provider to encourage proper care and strong medical outcomes through the use of novel financial incentives.

Gene Rapisardi, Cigna’s president and general manager in Southern California and Nevada, noted the company instituted “alternative funding arrangements” like the ones underpinning Scripps Select when in October 2015 it rolled out a collaboration with Irvine-based St. Joseph Hoag Health.

Within months, Cigna launched a similar product line in Texas with Seton Health Plan Inc. Like the St. Joseph Hoag initiative, and now the Scripps Select, the insurer said the Seton partnership would create a “clinically integrated and cost-effective system of care designed to improve quality and patient outcomes, reduce duplication of services and eliminate unnecessary costs.”

Savings Incentives

Because all health care is local, Rapisardi said, the three product lines are not identical. He declined to discuss contract details the insurer has set up encouraging health systems and their affiliated physicians to render the best care at a sustainably affordable price.

But generally speaking, he said, Cigna and the three health systems have agreed to “performance elements” that impact physicians, and an overall risk arrangement guiding each network’s financial relationship with the insurer.

Employers participating in the new HMO products will share financial risk, too. While the line is fully insured, as opposed to self-insured health plans funded by the employer, and covered by a stop-loss insurance policy, Rapisardi said employers will be able to receive part of a “surplus” resulting from cost savings built into Scripps Select.

The reason Cigna chose to expand this model to San Diego is Scripps’ integrated health care delivery system. The insurer needed a system that integrates physicians and facilities, Rapisardi said.

It should also be noted the new HMO products build on an early 2015 initiative called Cigna Collaborative Care. The program involving Scripps Health was one of seven statewide in which the insurer paid financial incentives to a local health-care system based on cost reductions and medical outcomes.

Taking Out Unnecessary Silos

Reynolds, the executive at Scripps, said that by giving the company a seat at the negotiating table, the new HMO line “gets us a little closer to the end customer — the employer and their broker or consultant.”

Although he cautioned that the company doesn’t yet know what appetite the market will have for Scripps Select, Reynolds predicted there will likely be plenty of demand for cost savings and improved access to quality health care.

“I think to us, it’s a long-term play to try and see if we can improve the level of integration between the payer and the provider in a way that either takes out cost or takes out silos that just don’t add any value,” he said.

Reynolds pointed to a specific change he expects to see in the new HMOs: Instead of Cigna contacting patients to persuade them to get flu shots, a medical professional employed by Scripps will handle the call.

That may put some patients at ease, he said.

“Maybe it’s better if Scripps takes care of these things,” he said.

Test Case

The bigger question for Scripps is whether it even needs Cigna as part of a locally focused HMO product. Although Reynolds and Rapisardi played down any notion of competition between their companies, Reynolds said he sees Scripps Select as a kind of test of his company’s insurance capabilities.

As things stand, Scripps offers an HMO only to its own employee base, which numbers about 15,000. But come summer, the product will be offered to other regional employers, Reynolds said.

That would put Scripps in direct competition with Sharp, the San Diego-based health system that launched an accountable care organization in 2011 now serving about 65,000 enrollees.

Reynolds acknowledged there traditionally has been skepticism about whether health systems should take on the role of an insurer. But he said the answer is not clear in all cases.

That’s why working with Cigna on Scripps Select is of added value. He said his company will get to work with a high-quality insurer to find out if it’s as effective as offering a standalone HMO product backed only by Scripps.

“It’ll be kind of a laboratory to see which one gets to the finish line faster,” he said.

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