Oscar to Drastically Narrow its Network in 2017

Politico
July 26, 2016
Oscar to Drastically Narrow its Network in 2017

Oscar, the health insurance start-up that promised to revolutionize the industry but has instead lost hundreds of millions of dollars, plans to dramatically narrow its network in New York, a move aimed at keeping premiums and health care costs in check, according to a blog post from the company's CEO.
Beginning in 2017, the insurer's network will have 31 hospitals in three systems - Mount Sinai, Montefiore, and the Long Island Health Network - and 20,000 physicians. That's down from more than 70 hospitals and 40,000 physicians at the beginning of 2016.
NYU Langone and Northwell Health are no longer in network, and the move doesn't leave a lot of hospital choice for those living in Brooklyn.
In a blog post, CEO Mario Schlosser tried to insist these moves are not about the balance sheet, and that fewer in-network doctors were actually good for customers.
"Our new network will not contain every hospital or doctor we have today, but this is a good and necessary change," Schlosser wrote. "Nevertheless, there will be some healthcare critics, entrenched in their views on an outdated system, who will say we are only changing our network to improve our bottom line."
Schlosser's post argued that this was really more of a principled stand against rising health care costs and unreasonable providers.
Whether that's true or whether he is just trying to stop the red ink, one thing is certain: Oscar will enter its fourth year in the New York market asking the Cuomo administration to raise premiums an average of 16 percent - and by as much as 30 percent on some plans - while telling customers they have far less choice than they had one year ago.
That's a combination that could prove a boon for its competitors such as CareConnect, run by Northwell Health, and MetroPlus, run by the New York City Health + Hospitals.
Schlosser, through a spokeswoman, declined to provide any comment beyond his blog.
Oscar, which has raised significant sums from private investors and has a valuation approaching $2 billion, lost more than $92 million in 2015 in the New York market.
This year is shaping up to be even worse. The company reported a net underwriting loss of $38.7 million on premium income of $64.2 million through the first three months of 2016, according to its most recent filing with the National Association of Insurance Commissioners. Oscar was also just informed it owes $31 million in a risk adjustment payment.
The insurer had 53,000 members at the end of 2015 and saw a 20-percent increase in membership during the first quarter of 2016, a boost that likely resulted from the collapse of Health Republic Insurance of New York. For most insurers, more customers is a positive, but for Oscar, the new customers appear to have accelerated its losses, according to the NAIC filings.
Oscar was founded by Schlosser, Josh Kushner, who named the company for his great-grandfather, and Kevin Nazemi on the premise better technology could improve the patient experience. Almost immediately, reviews were ho-hum, and the company struggled financially.
Even as it expanded into New Jersey, California and Texas, and as investors continued to buy in to the original premise, operating losses mounted forcing changes.
At the end of March, it dropped New York-Presbyterian from its network.
Schlosser said the company will reach out to affected members in October.
"We'll work to create a smooth transition plan for your care if any of your physicians are leaving the network, including setting up appointments with partner physicians who can take over," Schlosser's wrote in a note to customers.

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Crain’s Health Pulse
July 27, 2016
Oscar to Raise Prices, Cut Network in Half Next Year

Health insurer Oscar will cut its network in half for 2017 and will no longer cover many of New York City’s largest health care providers, the company announced in a blog post on its website Tuesday.

The move signals a shift in corporate strategy to focus on just a few large health systems, after initially using MagnaCare’s network and offering its customers a broad array of hospitals and doctors.

In 2017, the health plan will cover 20,000 providers, about half as many as it does this year, according to the blog post by Mario Schlosser, Oscar’s co-founder and chief executive. It will include 31 hospitals in its network, down from 77 in 2016. It has agreed to work with Mount Sinai Health System, Montefiore Health System and the Long Island Health Network, which includes 10 hospitals, Schlosser wrote in his post. The announcement was first reported by Vox on Tuesday.

Oscar has struggled financially in the first three years of the New York State of Health marketplace. In the first quarter of this year, it lost $38.7 million. For all of 2015 the insurer lost $92.4 million.

“Our new network will not contain every hospital or doctor we have today, but this is a good and necessary change,” Schlosser wrote. “Nevertheless, there will be some healthcare critics, entrenched in their views on an outdated system, who will say we are only changing our network to improve our bottom line.”
Schlosser’s explanation went on to emphasize improvements the insurer is making, such as extending its “concierge” teams that provide care management to all members next year, and relaunching its doctor-on-call service. He explained that the system divided up the New York metro area into 350 “sub-neighborhoods” and ensured that Oscar had adequate coverage of each area.

“While understanding and predicting physician referral patterns and operating privileges is a highly complex problem, we are confident that we have constructed a network that will offer a streamlined experience for our members,” he wrote.
As of March 31, Oscar removed from its network New York-Presbyterian hospitals and affiliates of the system, such as New York Methodist and New York Community Hospital in Brooklyn.

Then, on Monday night, other hospitals were informed of Oscar’s plan to drastically shrink its network.

Northwell Health was told it would be excluded “even though we gave Oscar favorable prices and terms,” said Howard Gold, Northwell’s executive vice president, leading its managed-care business operations. “While Oscar claims to be ‘innovative’ and a 'market disruptor,' they have struggled to make their model work.”
Gold contrasted Oscar with the “seamless integration” offered by CareConnect, Northwell’s provider-owned health plan. That insurer lost $31.8 million last year.
Niyum Gandhi, Mount Sinai’s chief population health officer, said he believes consumers will be getting greater value in exchange for less choice. Mount Sinai, which will be Oscar’s lone in-network health system in Manhattan, has been working closely with the insurer for about a year on projects that will make appointment scheduling and billing easier for patients.

“There are areas where we can make our industry’s back-end garbage not the consumers’ front-end problem,” he said.

The announcement had already started to elicit backlash from consumers Tuesday, as Oscar intends to raise premiums 18.4% on average in the nine counties it serves, according to the state Department of Financial Services. Meanwhile, those consumers will have fewer choices when it comes to doctors and hospitals next year.

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