Payvider: Health Insurance Payer and Healthcare Provider Combination Explained

Step-by-Step Tutorial: Understanding the Payer-Provider Combination in Healthcare

1. Introduction to Payers and Providers:

   • A payer in the healthcare industry is traditionally known as a health insurance company that collects premiums and assumes risks.
   • The video mentions Kaiser, a prominent payer in America, headquartered in Oakland, California, with over 12 million members.

2. Evolution of Payers:

   • More entities within the healthcare sector are transitioning to become payers, including hospital systems like the University of Pittsburgh Medical Center (UPMC) and Intermountain Health System.
   • Major health insurance carriers in the US are also shifting towards becoming payers.

3. Examples of Payer-Provider Combinations:

   • United Healthcare has its provider arm called Optum.
   • Aetna acquired Oak Street Health, creating a provider arm.
   • Cigna invested in Village MD, a network of clinics, under its provider arm Evernorth.
   • Anthem, the insurance arm of Elevance, made acquisitions in the health navigation and medical group sectors.

4. Reasons for Carriers Becoming Payers:

   • Over half of all Medicare beneficiaries now have a Medicare Advantage plan, where insurance companies receive a set amount per beneficiary annually.
   • The Affordable Care Act mandates that 85% of the premium collected must be spent on healthcare, leading carriers to explore innovative ways to maximize profits.

5. The Accounting Approach:

   • Insurance companies utilize subsidiary companies like Optum, Oak Street, and Village MD to pay providers a portion of the premium collected.
   • Primary care groups within these subsidiaries can manage care efficiently, keeping a significant portion of the premium for themselves.

6. Financial Implications:

   • By leveraging these payer-provider combinations, insurance companies can retain a substantial portion of the premium, significantly impacting traditional providers like hospitals.

7. Future Trends in Healthcare:

   • The video suggests that this trend of carriers becoming payers is just beginning and could potentially lead to hospitals also transitioning into payers.
   • Employers may face challenges in healthcare costs due to these evolving dynamics in the payer-provider space.

8. Conclusion:

   • Understanding the concept of payers evolving into providers in the US healthcare system is crucial for all stakeholders, including employers and individuals.

9. Additional Resources:

   • For further information on specific examples and trends mentioned in the video, you can refer to the channel AHealthcareZ - Healthcare Finance Explained.

By following these steps, you can gain a comprehensive understanding of the payer-provider combination in healthcare and its implications for the industry.