Would You Believe Four New Health System-Owned MA Product Lines? Only in Maryland

By James Gutman - August 20, 2015

Maryland, where I reside, is a strange state in many ways, and especially when it comes to both Medicare Advantage (MA) and hospitals. In Medicare, managed care penetration has been dismal, with the most popular product not even really an MA one but instead a five-star-rated Kaiser Permanente cost plan. In hospitals, which by Maryland law have to be not-for-profit, the state until the beginning of last year had perhaps the tightest regulation of charges in the nation. Now, however, both of those things have changed dramatically, and the result may be an interesting experiment in what inroads providers can make in owning MA plans.

It all started coming to a head in January 2014, when Maryland hospitals began a five-year global-budgeting demonstration program with the backing of the CMS Center for Medicare and Medicaid Innovation. The hospitals, in effect, get a fixed amount of money to serve their Medicare population and thus are fully at risk if that costs more than they are paid. This gives them a powerful incentive to improve population health and manage care. And it therefore gives them a big reason to embrace MA as a way to get better data, gain access to CMS star-rating bonuses and make use of beneficiary and provider incentives.

The implications of this were not lost on the state’s hospitals, which even before that had begun forming themselves into major health systems. One is MedStar Health, which includes such well-regarded facilities as Georgetown University Hospital, and it began in 2013 with the help of the partly provider-owned Evolent Health advisory firm, to develop MA plans. By this year, it was up to about 8,000 MA members. This success was not lost on the other growing hospital alliances, including John Hopkins HealthCare, which intends to start owning MA plans next year, as reportedly does its biggest in-state rival, the University of Maryland Medical System (UMMS). Nor are smaller systems left out, as several of them this February launched Advanced Health Collaborative, LLC, which acknowledges that it may launch MA products on behalf of some or all of its members in 2016 or 2017.

But it gets more interesting. Hopkins and UMMS, which are clear competitors albeit not of the “Hatfields-and-McCoys” variety like Pittsburgh-based Highmark Health and UPMC (which perhaps coincidentally is a joint-venture partner in Evolent Health), won’t have the other’s system in their MA products. And Hopkins will start with just MA PPOs, which could be a sharp contrast with Kaiser Permanente’s MA product structure.

What do you think about all these provider-owned MA products in the works in Maryland? Is this a good development for the industry — and for Medicare beneficiaries? Can they all be successful? What will this mean for the other MA plans in the state and for MA penetration? And is Maryland, which bills itself as The Free State, in its burgeoning provider-owned MA a harbinger of the future in MA or just an anomaly as usual?

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