Freehold-based health care system CentraState will launch its own health plan on March 1 that aims to offer more affordable coverage when members use CentraState's hospital and physician network.
Targeting small employers, members will also have the option to pay more out of pocket to use the extensive statewide and national provider network of QualCare, which provides health plans to employers statewide.
Being administered by QualCare, the new plan addresses the impact on the health care system of the Affordable Care Act and the long-term trend of rising health care costs, said John T. Gribbin, chief executive of the CentraState Healthcare System.
"Part of our mission here at the hospital is to improve the health and well-being of the people in our area," Gribbin said.
Gribbin said CentraState recognized that small employers are "having significant problems with their rates and they are slowly being priced out of the market. That was a big concern."
Gribbin said CentraState was able to create the cost effective plan because the hospital and more than 175 affiliated physicians in the health plan agreed to provide discounted rates to plan members.
In addition, the new plan extends the health and wellness initiatives that CentraState provides its own 2,300 employees to a wider community. Gribbin's credits this with helping keep the system's health care cost increases in the low single digits for the past decade.
"We've been involved very heavily over the last decade in an employee wellness and fitness and risk management program, starting with a health risk assessment," Gribbin said. "We have made changes to our plan design and created carrots and sticks so that employee who are at high risk in their health can move themselves to moderate risk and people at moderate risk can move to low risk. And by doing this over a decade now, we've been able to demonstrate savings in our own benefits costs."
Wellness programs are common among large employers like CentraState, which wanted to "figure out a way to put some of those same advantages behind a product and offer it to small businesses that don't have the wherewithal to do these things," Gribbin said.
The CentraState Community Health Plan is a partnership with the Affiliated Physicians and Employers Health Plan, a multi-employer health plan managed by QualCare. APEHP was launched nearly 13 years ago and now covers about 800 member employers and 13,000 lives. Like APEHP, the CentraState plan is a multi-employer, self-insured health plan that carries stop-loss insurance to protect it from spikes in medical claims.
Dawn Wright, vice president of insurance services for QualCare, said the new plan has a two-tiered network. Members are only charged co-pays if they stay within the tier one network, which includes the CentraState hospital and outpatient facilities and more than 175 CentraState-affiliated physicians. When members use providers in tier two, which is the entire QualCare state and national network, they are subject to a $2,000 deductible; however, if the services they need aren't offered in tier one, they will access the tier two network at tier one rates, Wright said.
"We know that people still might still want to use a particular specialist, or if they are out of the area they want to be able to access another provider. So we've given them the full QualCare network on tier two," Wright said.
The CentraState plan's coverage area will span several areas in central Jersey and offer prices about 15 to 17 percent lower than APEHP's existing small group portfolio, Wright said. Each employer group that joins the plan will get a rate for their group, which she estimated would on average be in the low-$400 a month range for a single individual and generally under $1,000 a month for family coverage.
The long-term cost saving will come from better coordinating patient care and reducing the health risk factors that lead to higher medical bills, Gribbins said.
He said small employers "don't have the wherewithal to manage the health factors of their employees; they are just not big enough and they don't have the expertise. We have been working on wellness, prevention and risk management for a decade now, and we have learned that there are ways that you can actually improve the health of your employee workforce. Not only does that help them, but it comes back to the employer in stabilizing our benefit costs over the long term."
Asked if creating its own health plan was also in the long-term interests of CentraState, Gribbin said that was certainly the case. The ACA has put pressure on all health care providers, including hospitals and doctors, to operate more efficiently and reduce unnecessary spending; hospitals have been under intense pressure to reduce admissions and provide more outpatient care.
"This is an opportunity where we think we can help our people in this service area deal with what is a very serious problem. But yes, of course it will help CentraState also," Gribbin said.
He said the ACA "without a doubt is forcing all hospitals to rethink their business models." This is because much of the effort to slow the growth of health care spending involves spending less on hospital care.
"And so we've got a tremendous task ahead of us to try to figure out a different way of functioning in the future and part of it is going to be taking some risk in doing things like this to help us manage that transition," he said.
Gribbin said a decade ago, 61 percent of CentraState's revenue came from traditional in-patient care, and now it's about 47 percent.
"We made a conscious effort to develop capabilities in the outpatient, wellness and prevention areas, and we have a large ambulatory care campus that is an integral part of the hospital. So that is a clear direction that we have been following over the past decade."
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