Provider-sponsored health plans in the era of COVID

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When the pandemic hit in early 2020, it created many challenges within the healthcare industry, and now another wave is stressing healthcare systems again. While providers have been strained by capacity and economic issues, health plans have fared better financially. When a lot of preventative and elective procedures were postponed, many of the payers were profitable in the earlier part of the year and are waiting to see how much of the normal claims volume returns in the latter part of this year.

Provider-sponsored health plans (PSHPs), many of which are part of integrated delivery systems, have some of the same challenges as other payers but have some different ones as well. Many of these plans have value-based payment arrangements with their owner systems, which has been been a more predictable source of income for the providers than fee-for-service revenue. The pandemic may accelerate the trend to move more providers into risk arrangements.

Capital investments have always been a challenge for PSHPs, and now more than ever, that may be a limiting factor as many of their owners are trying to preserve capital. One health system, which has created a Management Services Organization (MSO) to leverage its health plan expertise to help other systems, decided to abandon this strategy. The capital investment that the MSO needed was more than the system wanted to spend given the uncertainty of COVID. This constraint on capital could also impact health plans that want to expand geographically or by product line.

Large payers have capital on hand, and this could prompt them to look for acquisitions. A provider-sponsored health plan might be an attractive target. Will system owners view their health plans as a strategic asset for their future or will they be tempted to cash in on this asset?

There have been some system mergers, some of which involve health plans. Combining the organizations can strengthen their plans. These include Sentara Healthcare and Cone Health and, more recently, IntermountainHealthcare and Sanford Health.

PSHPs are in different lines of business, and each of these will experience different challenges related to COVID and the health and economic impact of the pandemic. For the health plans that offer Medicare Advantage, their elderly population is most at risk for complications from the virus. How are MA plans identifying the risk factors for this elderly population? For those members that have contracted the virus, some will have long-term complications. PSHPs can work with their health systems to address these needs.

As we find ourselves in the midst of the fall flu season and an increase in COVID rates, parts of the economy are recovering, but there are other segments that are not. There is a concern that the economy will stall. Some small business owners, such as restaurants and entertainment, have been hard hit. These are often a key customer group for PSHPs. Many of the people that have lost their jobs during the pandemic have also lost their insurance coverage or can’t afford to continue it under COBRA. Some of these may convert to Medicaid or ACA individual coverage.

Medicaid is a special challenge for states, health plans, and providers. States have lost tax income during the pandemic, while the number of people on Medicaid has been growing. To manage their costs, states will reduce reimbursement to providers and health plans. This will make it especially challenging for health plans that are part of a health system. There is also a vulnerability in the Medicaid and dual eligible populations where COVID has hit minority populations disproportionately. The pandemic has raised the focus on social determinants of health. The demand for behavior health services has also increased as health plan members have been experiencing higher rates of depression, anxiety, and loneliness.

The pandemic has created many operational challenges for health plans and their provider networks. After years of encouraging the use of telehealth and virtual care, the use of remote technology exploded earlier this year. The redesign of provider practices to leverage the continued use of this technology and getting the reimbursement aligned will continue. This is an opportunity for PSHPs and integrated health systems to expand virtual care.

So many businesses converted to virtual workplaces during the pandemic, and provider-sponsored health plans did as well. Some had been moving toward virtual workforce opportunities in key areas like care management, IT, and customer service for a number of years, but the pandemic has accelerated this trend. Health plans will be looking at how to make technology more effective to support its workforce, customers, and providers. With a remote workforce, productivity across all employees and orienting new employees to the company can be very challenging. One PSHP CEO said their strong culture helped support their workforce challenges. Another CEO said he requires video participation for team meetings to create more of a sense of involvement and to cut down on multitasking.

Times of great change and chaos also create opportunities for innovation and change. As we work our way through the pandemic, the election results, and a stressed national and global economy, it will take new ways of doing business and finding collaborative approaches to evolve the landscape for the financing and delivery of care.

Cathy EddyProvider-sponsored health plans in the era of COVID

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