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Updated: January 13, 2020

Novel health insurance plan aims to provide small employers more affordable coverage; skeptics remain

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One of the country’s largest health insurers is looking to solidify its Connecticut market share with the help of a relatively novel product aimed at small employers — a segment desperately looking for affordable coverage amid ever rising rates.

On Jan. 1, UnitedHealthcare debuted its “NexusACO” offering in Connecticut and several other New England states. The plan, first launched nationally in 2016, was initially targeted at self-insured large companies, but is now aimed at the fully insured small and large group markets in Connecticut, Massachusetts and Rhode Island.

NexusACO is unique because it combines two relatively new care concepts. First, it’s a “tiered” product, which means it groups hospitals and doctors by cost and quality metrics and incentivizes consumers — through lower premiums or copays — to visit providers offering the best bang for their buck.

That type of health plan has become increasingly popular in other states, but Connecticut has been slow to adopt it, as employers and workers here have generally shown a preference to pay more in premiums to access broader doctor networks.

NexusACO also involves an “accountable care organization,” which is an affiliated group of providers who agree to work together to care for a patient population at a certain price, with additional potential revenue tied to meeting benchmarks for quality outcomes and costs. That’s opposed to the much more common “fee-for-service” model that reimburses doctors and hospitals for each procedure and test they perform, which some say leads to higher healthcare costs.

NexusACO has an exclusive contract with St. Francis Healthcare Partners Network, which includes over 1,000 providers and acts as the plan’s top tier, meaning patients will be steered there through lower out-of-pocket costs.

The plan also enrolls companies with as few as two workers. Such micro employers, with five or fewer employees, often get ignored by private insurers and have the hardest time finding affordable coverage.

Stephen Farrell

UnitedHealthcare of New England President Stephen Farrell said tiered health plans aren’t common in Connecticut because “they haven’t delivered the value.”

But he’s hoping NexusACO can help change that, especially as steadily increasing premiums and out-of-pocket costs have made it more difficult for small employers to be competitive when it comes to offering affordable and quality health benefits.

Other tiered health insurance products exist in the state. For example, Anthem, UnitedHealthcare’s chief Connecticut rival, offers a tiered hospital plan, which doesn’t include physician groups like the NexusACO plan.

Farrell said NexusACO will stand out because its premiums are 10 to 15 percent lower compared to competing options, and also because of its structure.

Dr. Ronald Kimmel, chief medical officer at St. Francis Healthcare Partners Network, said Connecticut employers and health consumers have mostly been resistant to plans that limit provider networks.

However, he’s noticed a renewed push by insurers to offer such plans.

“We’re seeing more and more that these narrow networks are going to become more common,” Kimmel said. “The cost of health care is getting so high, it’s a huge strain on businesses.’’

Doubts persist about ACOs, limited networks

The accountable care organization (ACO) model has largely been pushed by federal Medicare overseers in the wake of Obamacare, the federal healthcare reform law passed in 2008.

ACO contracts involve financial rewards for providers who perform well, and, in rarer cases, financial risks (paired with potentially greater upside) for those who don’t.

Medicare ACOs have produced mixed outcomes over the past eight years.

The model can vary in commercial plans, and the results are more hidden from the public, but the NexusACO plan reserves the most attractive pricing for patients willing to visit doctors and other members of the St. Francis Healthcare Partners Network ACO.

Ellen Andrews, executive director of nonprofit Connecticut Health Policy Project, which advocates for affordable, quality health care for all state residents, has studied ACOs of various kinds over the past six years or so.

She said she is mostly unimpressed by the model and how it has performed in the state.

“At best, the results are mixed,” Andrews said. “Quality is getting better, but it’s also getting better across the entire healthcare environment, so it’s really hard to know if it’s because of the ACOs.”

She reserves additional skepticism for commercial ACOs, whose outcomes and incentives are more secretive.

“I actually thought this was a good idea in the beginning, with the proper monitoring in place,” she said of ACOs. “If everybody was rowing the same way that would be great for patients.”

Now, she said ACOs are a key driver of healthcare consolidation, which leads to higher prices.

“It sort of feels like this is not the way,” she said. “We keep trying to shift risk around. When it was insurers that was one thing, but now they are trying to get the providers to do it as well.”

However, many ACOs in Connecticut, including UnitedHealthcare’s new product, don’t take downside risk, which means hospitals and physician groups don’t have to shell out money if they miss benchmarks (instead they just miss out on shared savings or bonus payments). That may sound good, but at the same time, health experts have argued downside risk could help reduce health insurance costs.

Farrell said the industry shouldn’t give up on commercial ACOs, which have a generally younger, healthier patient pool than Medicare or Medicaid, and can vary significantly from one plan to the next.

“The performance of commercial ACOs is good with room to get better,” he said. “Its performance has not been optimized, it has not reached its peak.”

UnitedHealthcare has published some internal study results showing that self-funded versions of its ACO plans have led to fewer hospital admissions, readmissions and emergency-room visits, as well as shorter inpatient stays and better cancer-screening metrics.

That data is a few years old. UnitedHealthcare says it’s in the process of updating it.

“We can expect the fully insured NexusACO to be at least as good as the results published for the self-funded version,” Farrell said.

It remains to be seen how the plan will perform in the Connecticut market, where UnitedHealthcare is already a top-ranked player in the small and large group markets, as well as Medicare advantage.

UnitedHealthcare said in early 2018 that it expected to have 250,000 enrollees in its NexusACO nationwide by the end of 2019. Asked whether it met that goal, the carrier did not provide an updated figure.

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