HEALTH INSURANCE

R.I. insurers agree change is coming

‘[Incentives] made them behave more like a hotel.’

PBN PHOTO/RUPERT WHITELEY
UNITED FRONT: Stephen J. Farrell, president of UnitedHealthcare of New England, speaks at recent meeting of the Health Insurance Small Employer Taskforce. He told the board evolution in the insurance market is being spurred by innovation.
By Richard Asinof
Contributing Writer
Posted 3/19/12

Regardless of how the U.S. Supreme Court rules in June on federal health care reform, economic, demographic and technological forces will continue to push and reshape the health care delivery system, moving away from fee-for-service and toward global payments and evidence-based outcomes that reward value, not volume.

As a result, the health-insurance market is embracing a new dynamic: Risk is being transferred from health insurers to the hospitals, providers and physician networks, based upon how well they perform under the new quality measures.

That was the message delivered by Chas Rhoades, chief research officer at one of the nation’s pre-eminent research think tanks, The Advisory Board Company, at his talk at Brown University on March 1.

Rhoades is not alone in his prognosis. Aetna CEO, Chairman and President Mark T. Bertolini, speaking at an insurance industry trade show on Feb. 21 in Las Vegas, predicted that the end of the traditional health-insurance business is at hand. “The system doesn’t work, it’s broken,” Bertolini said. “The end of insurance companies, the way we’ve run businesses in the past, is here.”

In Rhode Island, symptoms of the health-insurance market’s altered landscape abound. Total commercial health-insurance enrollment declined by 10 percent between 2005 and 2010, from 620,000 covered lives to 555,000 covered lives, and that decline continues at the rate of about 2 percent a year, according to the R.I. Office of the Health Insurance Commissioner.

All three commercial health insurers in the Rhode Island market are busily reshaping their strategies to adapt to what they all agree is an evolving marketplace.

To capture details of those changes, Providence Business News interviewed each of the three presidents and CEOs – James Roosevelt Jr., of Tufts Health Plan of Rhode Island, Stephen J. Farrell of UnitedHealthcare of New England, and Peter Andruszkiewicz of Blue Cross & Blue Shield of Rhode Island. All three participated in a March 6 meeting of the ad hoc Health Insurance Small Employer Taskforce under the direction of Health Insurance Commissioner Christopher F. Koller.

Andruszkiewicz arrived in Rhode Island eight months ago, replacing James E. Purcell as the health insurer’s president and CEO. “I believe we’re on the cusp of a lot of change,” he said, adding health care reform is really about payment reform. “Health care reform through the Affordable Care Act made a lot of changes in insurance reform; those changes were necessary and they were good things. But health care reform doesn’t come until there are changes in the incentives in the system for how hospitals, physicians and other caregivers get paid.”

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