First hospital system in Louisiana creates Medicare Advantage plan [The Advocate, Baton Rouge, La.]

Advocate, The (Baton Rouge, LA)

Oct. 17—New Orleans-based Ochsner Health System is the first hospital system in Louisiana to create its own health insurance arm selling Medicare Advantage policies.

Ochsner's Medicare Advantage plans include prescription drug coverage, fitness, dental, hearing and vision. Ochsner's premiums and copays begin at $0. The Medicare Advantage plan is integrated into the health system, according to the hospital network.

Before rolling out statewide, Ochsner wants to sell plans in the New Orleans and Baton Rouge region, which includes the following parishes: Ascension, East Baton Rouge, East Feliciana, Iberville, Jefferson, Lafourche, Livingston, Orleans, St. Charles, St. John the Baptist, St. Tammany and West Baton Rouge.

Medicare Advantage plans already offer extras such as dental benefits, vision coverage or gym memberships that regular Medicare doesn't provide. But Medicare Advantage can restrict access to a network of doctors or hospitals. Medicare doesn't have those restrictions.

Ochsner sees Medicare recipients as a growing market as there are more than 11,000 people who enroll in Medicare each day nationwide. Open enrollment for the program started Friday and goes until Dec. 7.

"This allows us to be more holistic in how we approach health care, lots of our Medicare members have challenges with billing and collections," said Warner Thomas, CEO of Ochsner Health. "Administratively this should be a lot easier for coordination between the health plan and the health system."

Ochsner doesn't see the move as a conflict of interest to become both the insurer and the provider.

"There's a lot of waste in the administrative piece of health care between the providers and the plans; being on both sides of that will allow us to free up more dollars," said Scott Posecai, chief financial officer for Ochsner.

Statewide nearly 46% of Medicare beneficiaries in Louisiana have Medicare Advantage plans. There are 426,830 people already enrolled for Medicare Advantage plans across Louisiana.

In East Baton Rouge Parish, nearly 58% are participating in the supplemental private insurance program out of 76,859 recipients. In Orleans Parish, 60% out of 65,136 enrollees had Medicare Advantage. But in Lafayette Parish, 29% have the program for extra benefits out of 40,797 plans.

The average monthly premium for a Medicare Advantage plan is about $13, about a dollar less than in 2020, and some plans don't charge premiums at all. Private plans are already sold by Humana, Aetna and Blue Cross Blue Shield of Louisiana. Humana has the largest market share across the state with more than 200,000 customers. Blue Cross Blue Shield has 22,737 members with Medicare Advantage plans in Louisiana.

Hospital-controlled Medicare Advantage plans are not very common, but some systems have adopted them.

About 15% of Medicare Advantage enrollees in Pennsylvania are in a University of Pittsburgh Medical Center plan, and 13% of enrollees in Maryland have plans with Johns Hopkins.

It was not immediately clear how Ochsner's plans may impact the insurance market.

"For any Medicare enrollee selecting a Medicare Advantage plan, an important factor in that decision is whether their preferred doctors or other hospitals that they may prefer are in network," said Meredith Freed, policy analyst with Kaiser Family Foundation's Program on Medicare Policy.

The Medicare Advantage market has been growing, and there were more than a dozen insurers that entered the market this year. The Kaiser Family Foundation found that the annual gross margins among Medicare Advantage plans were 24% higher in 2020 when compared with 2019 and an uptick of 31% in 2018.

"These findings suggest that Medicare Advantage remains an attractive, profitable market for insurers," Freed said.

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