ALLENTOWN, PA – Less than three months after launching a self-insurance program in its local market, WellNet Health Plans has announced three separate PPO agreements that will expand its market reach into West Virginia, Nevada and the Washington, D.C. metro area.
Through contracts with OneNet in Maryland, Nevada Preferred Professionals in Nevada and 4MOST in West Virginia, WellNet has broadened its network by more than 77,000 healthcare practitioners and 450 hospitals.
“In order to compete with health plans, we need to find networks with strong access and discounts that allow us to be price competitive,” said David Feinberg, co-president of WellNet Health Plans. “With these three agreements we have entered markets that we think are favorable for our self-insured product.”
When WellNet is evaluating potential new markets it looks for a number of different things, Feinberg noted. First, it needs to find solid PPOs that offer broad access to healthcare providers in the market as well as
discounts that will allow it to compete against major insurance companies.
OneNet fits that bill, said Bob Tallent, senior sales director for the Maryland-based PPO.
“We are the largest in PPO (in the) Washington metro area, we are well known and the brokerage community is very aware of OneNet,” Tallent said. “It is an advantage for them to use us because of the strength of our network.”
WellNet, Feinberg added, also looks for states where the insurance regulations “are not onerous for stop-loss, or conversely have excessive amounts of fully-insured requirements that would make it more attractive to be self-insured.”
That’s the case in Nevada, which mandates a number of treatments and procedures that commercial health plans must offer. Since WellNet’s program is based on actively managing the health of a company’s entire workforce and paying appropriately for the care needed, the age and demographics of a company might suggest there would be very low use of one or more of the mandated coverage items. So with a commercial plan, they would effectively pay for coverage they didn’t need.
“Those requirements for private insurers make Nevada a very good state for WellNet,” said Mary Hoover, vice president and COO of Nevada Preferred Providers. “Because self-insured plans are covered under federal ARISA laws, they don’t need to meet the state’s mandates, and that allows them to design programs that fit their clients better.”
Hoover said the economic climate in Nevada might also play in WellNet’s favor, since Nevada has been hit particularly hard by the recession.
“There is a lot of self-funding in the small business sector,” she said. “It has the potential to relieve a lot of the pressure businesses in Nevada are under.”
While WellNet will write business for groups with as few as 10 employees, its sweet spot in the market is for groups with 50 to 150 employees.
“The reason we get traction with companies that size is they are big enough to be at least familiar with self-funding on some other line item like workers’ comp, or they are large enough where they may have been pitched in the past on a traditional self-funding perspective, but the economics and the risk profile didn’t make sense for them,” said Feinberg.
From a competitive standpoint, WellNet also has the advantage of being able to provide virtually all the different pieces of the puzzle an employer would need to be self-funded.
“One of the reasons we pursued this business model is because of the economies of scale in terms of development. If you think about self-funding in its broadest strokes, it is about bringing different pieces together, whether it be a TPA, pharmacy benefit manager, care manager, PPO and a stop-loss carrier,” Feinberg said. “By doing a lot of the up-front work we did in Pennsylvania, it allows us to plug and play as we move into a different market.”
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