Banner Health, the Phoenix-based health system that operates 23 hospitals in Arizona, and Blue Cross Blue Shield of Arizona have formed a 50-50 joint venture to offer a new Medicare Advantage plan.
Blue Cross Blue Shield of Arizona Advantage will initially be marketed throughout greater Phoenix—Maricopa County and portions of Pinal County where an estimated 500,000 Medicare-eligible people reside. The Medicare Advantage plan will be open for business by October 15, when the national open enrollment period for Medicare begins.
The new plan will replace Banner Health's existing 22,000-member Medicare Advantage plan and continue to offer similar benefits. It will be the Blues plan's first foray into the Medicare Advantage arena, although BCBSAZ does provide Medicare Supplement and Medicare Part D plans for more than 23,000 members.
Banner Health and BCBSAZ have been seeking ways to increase their presence in Arizona's highly competitive Medicare market, where Cigna, Health Net, Humana, and UnitedHealth already offer well-established products.
The joint venture capitalizes on the name recognition of Banner Health and Blue Cross Blue Shield of Arizona in the state. The addition of the Medicare Advantage product positions the Blues plan to develop more lifetime members who maintain their healthcare coverage with the company.
Although Banner Health will maintain a governance position, the joint venture places much of the day-to-day operations of the health plan into the experienced hands of BCBSAZ to take advantage of quality improvement and care coordination programs already in place for Blues members. Banner Health's hospitals and physicians will provide the exclusive network for the BCBSAZ Advantage.
Plans to expand the market for BCBSAZ Advantage beyond Maricopa and Pinal counties are "undetermined," Chuck Lehn, vice president of managed care for Banner Health, tells HealthLeaders Media. "We would like to first focus on high quality service for our existing and new members."
Lehn said the two also have another project in the works. The Arizona Blues recently announced plans to launch BlueAlliance, a Banner Health Network–aligned commercial health plan that will offer lower premiums by limiting the network to Banner's 2,500 healthcare providers in the Maricopa County area.
Banner Health also partners with other health plans, although the joint venture is the only relationship that involves ownership. It has teamed with Aetna in an accountable care organization that offers a shared-risk product, Aetna Whole Health, which covers coordinated care only at Banner Health's Arizona facilities. The incentive for employees is reduced cost of care. The ACO will base compensation and rewards on reduced hospital readmissions, expanded access to primary care physicians, and increased use of preventive screenings. The effort builds on the health system's extensive investment in electronic medical records and health IT.
BCBSAZ is also interested in "opportunities to work collaboratively with other hospital systems in the state," Sandy Gibson, executive vice president of internal operations for BCBSAZ, says.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
