Anthem’s New Partnership With Seven Hospitals Builds on an Old Idea in California

A new payer-provider partnership in Southern California called Vivity has been billed as a first-of-its-kind in the nation.

Media headlines and stories touted the uniqueness of the partnership. To some experts, however, this is not all that new an idea, particularly not in California, where managed care and integrated networks have been operating for years.

How Vivity Will Work

The new partnership, announced by Anthem Blue Cross two weeks ago, will operate in Los Angeles and Orange counties. Vivity members said there will be able to access some 6,000 physicians, 14 hospitals and clinics, laboratories and surgery centers affiliated with seven health systems:

  • Cedars-Sinai Medical Center in Los Angeles;
  • Good Samaritan Hospital in Los Angeles;
  • Huntington Memorial Hospital in Pasadena;
  • MemorialCare Health System in Orange County;
  • PIH Health in Whittier;
  • Torrance Memorial Health; and
  • UCLA Health.

Participating health systems must meet certain quality standards and have agreed to provide care at a price that is equal to or below the actual cost. They also plan to eventually share patients’ health records and take part in care collaboration. Vivity partners will share profits and losses. Employers who sign up for Vivity could end up spending less on employee health care, according to Vivity.

Creating Vivity is seen by many as a new way for Anthem — and Wellpoint — to compete with Kaiser in California. Anthem Blue Cross, a division of Wellpoint, is California’s second-largest insurance company with about 23% of the market. Kaiser Permanente, perhaps the most recognizable integrated network, has about 40% of the California market.

Nationally, it’s the other way around. Wellpoint is the country’s second largest health insurance company, ahead of No. 3 Kaiser, both of which trail No. 1 UnitedHealth Group, according to 2013 data reported in U.S. News & World Report.

What’s New — and What’s Not

Deborah Kelch, director of California’s Health Insurance Alignment Project, said, “It’s important to recognize that it’s good news that providers and insurers are coming together and thinking about how they align. It’s good news that people are thinking in creative ways in an environment where we’ve made competition more a of a benefit.”

But at the same time, “it’s also important to recognize that a lot of what they’re doing has been tried before and is still going on now in California,” Kelch said. For instance:

  • Vivity is essentially an HMO, an insurance product with a long history in the state;
  • Similarly, the state has already had many regional permutations of the general structure of insurers contracting with competing providers and hospitals; and
  • Medical groups and hospitals in the state have shared savings and risks with insurers in several situations, going back to the 1970s.

What’s particularly unique about Vivity — the part that generates the first-of-its-kind descriptor — is its financial model.

“My understanding is that forming a separate LLC where all eight entities are partners in a new venture — that arrangement is unique,” said Darrell Ng, public relations director for Anthem.

Kelch also said that if Anthem develops and delivers on some other touted parts of the partnership — electronic data sharing, shared management, and the move toward vertical, not just virtual, integration — “it will be noteworthy.”

(Kelch has been spearheading a two-year project to help California officials navigate the unique situation of having two state agencies — the Department of Managed Health Care and the Department of Insurance — overseeing Affordable Care Act changes. The Health Insurance Alignment Project is funded through a grant from the California HealthCare Foundation, which publishes California Healthline.)

Vivity Part of an Evolving System

“This seems to be a very encouraging step in the maturing and evolution of the health care system in California,” said Stephen Shortell, former dean of UC-Berkeley’s School of Public Health. Shortell is now the school’s Blue Cross of California Distinguished Professor of Health Policy and Management.

Vivity was inspired in part by the Berkeley Forum, a collaboration of health care CEOs, insurers, public policymakers and health care researchers based at Berkeley’s School of Public Health.

No fewer than half the eight Vivity partners have representatives on the Forum, including Pam Kehaly, west region president for Anthem Blue Cross. The Forum, which has been meeting for two years and will continue to meet through this year, issues reports periodically.

“Parts of the plan as I understand it follow almost exactly two of the main recommendations we came out with last year at the Berkeley Forum,” Shortell said.

According to Shortell, the recommendations were to:

  1. Form more integrated care groups and find new ways to deliver integrated care.
  2. Move away from fee-for-service systems.

“This new partnership appears to be doing both and that’s very encouraging,” Shortell said.

Future for Vivity, Similar Arrangements

Starting Oct. 1, Vivity initially will be available to firms with at least 50 employees and CalPERs, one of the biggest purchasers of health insurance in the country. CalPERS spends more than $7.5 billion a year for coverage for about 1.3 million current and former state employees and their families.

“We’re starting small on purpose,” Ng said. “We’ll definitely be looking for other places where this model makes sense, but we want to make sure we get things up and running smoothly before we stared to look at other geographical possibilities in California and perhaps elsewhere, as well as expanding to small group and individual markets.”

Ng said Anthem has received inquiries from other parts of the country interested in Vivity, but declined to describe who was expressing interest or where.

Pointing out that similar efforts are under way in other parts of the state, Shortell said he expects to see new partnerships form and integrated plans and services grow.

“I think it will be interesting to watch what happens. I think we’re going to see within the state more experimentation with global payments and global risk and more movement away from fee-for-service,” Shortell predicted.

Around the nation

Here’s what else is making news on the road to reform.

The original integrator: Speaking of Kaiser Permanente, over at the Health Affairs Blog, University of Virginia public health sciences professor Jeff Goldsmith interviews former CEO George Halvorson. Halvorson talks about the growth of managed care, changing patient demographics in California and the future of health reform.

Clinical meets business: Recognizing that many of health care’s biggest challenges are actually business problems, an increasing number of students are pursuing joint M.D./M.B.A. programs. The Atlantic takes a look at the growing trend and how those extra three letters after their names can give doctors a competitive advantage when it comes to salary and leadership positions.

Single payer shot down: Switzerland will keep its privatized health care system, after voters roundly rejected a single-payer option. At Vox, Sarah Kliff explores the pros and cons of the country’s health care system.

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