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the provider and the third-party insurer existing as separate and distinct business entities.249 Through the patient’s eyes, after the provider delivers care to the patient, the provider then bills the patient’s third-party insurer, and the transaction is complete. What the patient does not see is the lengthy, and tedious, “behind the scenes” contracting action between the providers and insurance companies. Patients are insulated from insurer-provider reimbursement negotiations that define the scope of patient care. The traditional negotiations relating to the reimbursement contract between insurers and providers result in a “win-lose negotiation focused on rates.”250 The pressures stemming from new reimbursement structures emphasizing population health will lead health systems to consider launching their own health insurance plans.251 Many scholars propose specific dates as to when health insurance companies, as the nation traditionally knows them, will be extinct,252 but this article emphasizes the way the lines between health insurance companies and providers will blur, eliminating the traditional role of health insurance companies. Under the new managed care model, hospitals are pressured to manage a patient’s total health care, as well as the total cost of that care.253 New opportunities may stem from these new responsibilities.254 As hospitals begin to manage patient care and risk, “they’re sort of halfway toward being an insurance company.”255 When a health system operates and controls a health plan, the premium dollars stay in the health system and “a smaller fraction walks out the door.”256 In a model where healthcare providers serve as insurers, traditionally misaligned incentives of providers and insurers are eliminated. In the traditional fee-for-service model, providers are financially
249. Ellison, supra note 172. 250. Burns, supra note 245. 251. Margaret Dick Tocknell, 1 in 5 Health Systems to Become Payers by 2018, HEALTH LEADERS MEDIA (Aug. 20, 2013), http://healthleadersmedia.com/page-1/HEP-295415/1-in-5- Health-Systems-to-Become-Payers-by-2018##. 252. See, e.g., id. (noting that 1 in 5 health systems will become health insurance payers by 2018). 253. Roni Caryn Rabin, Some Hospital Networks Also Become Insurers, WASH. POST (Aug. 25, 2012), https://www.washingtonpost.com/business/some-hospital-networks-also- become-insurers/2012/08/25/ 53e90a72-eb1d-11e1-b811-09036bcb182b_story.html. 254. See Phil Kamp, Industry Perspective: Less Risky Than It Seems: Provider- Sponsored Health Plans Take Hold, VALENCE HEALTH, http://valencehealth.com/uploads/ files/Valence_Health_Industry_Perspective_Less_Risky_Than_it_Seems.pdf (last visited Mar. 10, 2016) (noting that a health system that operates a health plan may incur new responsibilities such as: “claims payment, customer service, insurance reporting and other administrative operations”). 255. Rabin, supra note 253. 256. Kamp, supra note 254; see Herman, More Health Systems, supra note 258 (noting that a provider-sponsored health plan frees providers “from having to share with insurance companies any savings they generate from improved quality and efficiency”).