In the latest sign that hospitals must do much more than treat sick people to compete in today’s health care market, CentraState Health System in Freehold has launched its own health plan.
Since March 1, the CentraState Community Health Plan has been offered through Affiliated Physicians and Employers Health, a self-insured benefits company that already covers 13,000 people from 800 businesses, according to a CentraState announcement.
The plan is aimed at cost-conscious physician practices with at least two employees, and any company that is a member of the Greater Monmouth, Howell, and Jackson Chambers of Commerce.
The premium rates in the CentraState Plan are about 17 to 19 percent less than Affiliated Physicians and Employers Health typically offers its members. CentraState’s 175 physicians also have agreed to offer discounts to help make the plan more affordable, according to the announcement.
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“As part of our mission to improve our community’s health, we were eager to assist our area businesses in finding a cost effective way to manage their health costs and ultimately the health of their employees,” said John T. Gribbin, CentraState’s president and CEO.
“This is New Jersey’s first community-based product that will offer small and mid-sized businesses a health plan centered around a local health care system and its providers, while still providing these businesses with the full breadth of the expansive QualCare network,” Dawn Wright said, a vice president for QualCare Alliance Networks of Piscataway, which manages the plan.
The partnership is another example of how the Affordable Care Act is changing health care. Hospitals took deep cuts in Medicare funding to help pay for the law. Hospitals also lose federal money if the rate of hospital readmissions among Medicare patients is high. The industry is looking for different ways to make and save money.
CentraState’s business model is known as a Multiple Employer Welfare Arrangement Health Plan, called MEWAs. Meadowlands Hospital Medical Center in Secaucus created a similar plan.
This business model is not without risk, said Joel Cantor, director of the Rutgers Center for State Health Policy.
“These models are self-funded, meaning that the firms involved bear full financial risk, as opposed to having insurance companies bear risk,” Cantor said. “In small groups, one or two catastrophic cases can lead to significant financial burdens on the sponsor.”
The model offers another choice for business owners, which is good, but it might diminish the supply of relatively healthy people out of the insurance market, Cantor added. “To the extent that comparatively healthy small groups are leaving the insured market to form MEWAs, the average cost for the small businesses remaining in the market will go up.”
By 2016, Obamacare will require businesses that employ 51 to 99 full-time workers must provide health coverage. Smaller companies are not obligated to offer coverage. Companies with 100 or more workers must comply next year.
Date: March 24, 2014