Lessons big insurers can learn from CO-OPs

I'm a frequent shopper of mom-and-pop stores. I like their personal service, the unique products sold and the genuine attention the shop owners and employees provide.

And I hope the core values of such small retail shops can translate to non-traditional health plans trying to give big insurers a run for their money. Sure, consumer oriented and operated plans (CO-OP) won't likely become the next UnitedHealth or WellPoint, but if only a little of their values can spill over into the big guys, then I think all their blood, sweat and hard work is well worth it.

Although some insurers may have counted out the non-traditional health plans as strong competition after the fiscal cliff deal cut all remaining loans for CO-OPs, an official with the U.S. Department of Health & Human Services said they remain viable entities.

"Two of the most important considerations for approval of co-ops were how likely they were to succeed, and their financial viability," Barbara Smith, director of the HHS Center for Consumer Information and Insurance Oversight, told Bloomberg. "We look at the co-op's management team, their ability to assemble a provider network, their financial viability moving forward and their ability to have a relationship with the broader community."

One such CO-OP, the Evergreen Health Cooperative, which is run and operated by Maryland's Howard County, is using $65 million in federal loans to offer individual and small group plans through health insurance exchanges this October.

One plan that Evergreen will sell through the Maryland online marketplace is a statewide option with lower premiums than its competitors. Another plan, which initially is limited to the Baltimore area, will assign members to a medical home clinic where they'll receive most of their healthcare, plus see health coaches. Networked doctors participating in the medical home program will receive a salary instead of separate fees for each service performed.

As part of its plan to offer lower premiums--some as much as 30 percent less than competitors, according to consulting firm Milliman--Evergreen will reduce wasteful and duplicative services by requiring doctors to collaborate with health coaches and social workers, forming so-called "teamlets" to provide more efficient care, Peter Beilenson, Evergreen CEO, told Bloomberg. Doctors also will use electronic health records and video-conferencing equipment.

And as the only government-run CO-OP, Evergreen could serve as a model for other similar ventures, particularly if it can successfully cut costs while managing members' care. "What we're looking at is creating a product that will be much less expensive than the private carriers are offering," Howard County Executive Ken Ulman told Bloomberg. "We do have some resources here; this ought to be a place where we can create a model."

Personally, I'd love to see some innovative ideas spreading throughout the insurance industry. If insurers would stop resisting and pushing back on the idea of CO-OPs, maybe they could learn a thing or two from them. Because sometimes the best and brightest ideas are hiding in a corner, just waiting to be uncovered.

While retail behemoths like Target, Amazon and Wal-Mart are as far away from the mom-and-pop shop around the corner, I do think these outlets have learned some valuable lessons from their smaller counterparts, namely providing stellar customer service. Maybe big insurers like UnitedHealth, WellPoint and Aetna can do the same from the few CO-OPs that are lucky enough to come to fruition soon. - Dina (@HealthPayer)