MemorialCare's new Seaside MCO manages plan-to-plan contracts

On September 1, MemorialCare Health System, a not-for-profit integrated delivery system with six hospitals launched its Seaside Health Plan as perhaps a hedge against the ongoing uncertainty surrounding the future of healthcare.

“We are now moving from a being a system of hospitals to becoming a fully integrated health system,” says Barry Arbuckle, PhD, MemorialCare Health System president and CEO. “The addition of a health plan license will be useful in the immediate term but also have some potential longer-term strategic value.”

As payers move from traditional fee-for-service to risk-based reimbursement, Arbuckle notes that many physicians believe that they can better serve the community by “being in a position to own and operate the health plan that allows them to make some utilization decisions rather than having some other middle person doing so.”

Rather than building its own infrastructure to support the plan, Seaside began by acquiring the assets of Universal Care in November 2012. The deal included the retention of certain key staff members with experience in health plan operations, as well as plan-to-plan contracts to be serviced by assignment of agreements with Universal Care’s contracted providers and MemorialCare’s primary care physician network.

The plan-to-plan contracts allow Seaside to operate like a health plan but partner with other health plans for certain services, including claims processing and marketing.

“We wanted to be able to hit the ground running with greater success and less expense this way,” says Arbuckle.

Seaside will not be participating in the California health insurance exchange in 2014 and it is evaluating whether to participate in 2015.

A key initiative for Seaside Health Plan is the demonstration project it is operating for California Children’s Services. The project is one of five in the state designed to create a managed care environment for children with certain chronic conditions that will require life-long care.

“These kids typically see multiple specialists for a lifetime,” says Arbuckle. “The care for these patients has historically been quite uncoordinated and paid on a fee-for-service basis. The demonstration project is moving that care back to more of a managed care, fully coordinated mode.”

Insurance for that population has traditionally been an issue. This demonstration project has the added benefit of being able to move children out of the demonstration project and into the Seaside Health Plan under Medi-Cal if they qualify when they turn 18 years old.

“Because we are a health plan, we can continue to cover them and we have the systems necessary to hand them off seamlessly,” says Arbuckle.

Seaside is a regional plan that will serve southern Los Angeles County and northern Orange County, Calif. with a network that includes about 300 primary care physicians and specialists. Seaside was approved with a Knox Keene health plan license earlier this year, and is a participating network for certain partner health plans that include Health Net, L.A. Care Health Plan, Anthem Blue Cross, Blue Shield of California and Care 1st Health Plan.

The not-for-profit Seaside Health Plan is named after Long Beach’s first hospital which opened in 1907 and is today Long Beach Memorial. It is open to individuals and families enrolled in Medicare, California’s Medicaid program Medi-Cal, Medicare/Medicaid dual eligibles and commercial health plans.