MSU Health Care And Nomi Health Offer Direct Contract Model Health Insurance To Self Employers

A Utah based company, Nomi Health, is bringing a new model of health care insurance to Michigan.  They promise quicker payments to providers and lower costs to employers.  Nomi Health operates a data analytics division called Artemis which they claim is responsible for considerable savings:

https://www.crainsgrandrapids.com/news/health-care/msu-health-care-helps-employers-save-on-insurance-costs-with-new-direct-contracting-model/

MSU Health Care helps employers save on insurance costs with new direct contracting model
By Mark Sanchez - January 25, 2024

A Utah company that offers direct contracting for medical care to employers with self-funded insurance plans wants to build a broad market presence in Michigan, starting with the academic medical center and practice for Michigan State University.

MSU Health Care Inc. this month joined Nomi Health’s care network, which has already contracted with a dozen large employers spanning from mid-Michigan to the lakeshore for coverage for that begins April 1.

They aim to reduce the high costs for health care by contracting directly with care providers, eliminating the middleman of health insurers and brokers.

“The current system is designed to get exactly what it’s getting, and what it’s getting is higher prices, less satisfaction from physicians, nurses, employers and patients,” said Roger Jansen, chief strategic growth officer at MSU Health Care. “We believe that employers have been continuing to foot the bill for health care in a way that is unsustainable, and we have to find a different business model.”

Nomi Health promises to lower costs for employers through a company-owned pharmacy that charges wholesale prices for prescription drugs plus a 10% markup and a $3 transaction fee. The company also uses data analytics to provide employers insight on their spending and which physicians and care facilities perform at a high level. As well, it contracts with care providers and pays them within 48 hours of service, Jansen said.

In return for quick payments, Nomi Health is able negotiate better rates with care providers than what commercial health carriers secure.

Self-funded employers who enroll in Nomi Health get access to a care network with zero deductibles and co-pays for employees.

Under the contract with Nomi Health, MSU Health Care charges employers “a pure agreed upon price that’s great for us and great for the employer,” Jansen said. “It’s a one-and-done transaction. There’s no follow-up billing.”

Building out the network

After signing MSU Health Care and entering the Michigan market, the Salt Lake City-based Nomi Health wants to contract with many more health systems and medical practices across the state to build out a large care network for employers to use, said co-founder and CEO Mark Newman.

Nomi Health is “going deep in Michigan to build this network for any employer to tap into,” Newman said. MSU Health Care is the first care provider of size in Michigan to join Nomi’s network, he said. The company has smaller primary and specialty care providers in the network.

“We are planning to massively expand across Michigan with providers across the state,” Newman said. “We’re looking to build a full replacement network for any employer to use for all of their health care needs, and … the partnership with MSU is a starting point. We’re bringing along a lot of other providers with us.”

That push began with MSU Health Care, which has more than 300 primary and specialty care doctors practicing statewide, concentrated primarily in mid-Michigan and the Lansing area. The practice plans to expand with additional clinicians and locations, either on its own or with partners, and has been considering a new location in the Grand Rapids area, Jansen said.

“We want to create what we call the health system for employers. Employers are the ones that are footing the bill for America’s health care,” he said. “If employers don’t see a reduction in their health care costs, they won’t be able to see an investment in their people, whether it’s salary or it’s innovation or it’s new hires and new development.”

‘A different option’

In a recent interview with Crain’s Detroit Business, MSU Health Care’s new chief medical officer, Dr. Michael Weiner, said the university wants to expand its health care reach beyond mid-Michigan. MSU Health Care is “about to open our first ambulatory surgical center in the Lansing area and (we) are breaking ground on another in East Lansing soon,” Weiner said.

MSU Health Care also has its own lab and a tele-physical therapy service, he said.

“The future of medicine, not for just MSU, the future of medicine in America, is pushing to get patients out of the hospital and into outpatient settings. We are wonderfully set up to be part of that national transition — and lead some of it. We are focused on ambulatory surgical centers and primary care delivery and utilizing telemedicine,” Weiner said. “If you get rid of the burden that is the hospital and just think about the agility of what’s available without a hospital, we are primed for that. That is our strategic plan.”

In joining the Nomi Health network, MSU Health Care aims to tap into the rising frustration among employers about the persistent rising cost for health care.

All of the self-funded employers that MSU Health Care approached while putting together the arrangement with Nomi Health signed on to do direct contracting for care, said Jansen, noting that “we’re batting a thousand.”

“People are yearning for a different option. We’re a different option,” said Jansen, who hopes that MSU Health Care’s new arrangement “will become a model that others can adopt either by working directly with Nomi or others that may be in a similar place in the marketplace.”

“The business model is the deepest form of innovation that will have the biggest impact on change,” he said. “If we don’t change how dollars come in and go out and pay people in the system, it doesn’t matter.”

Confronting an unaffordable model

Jansen believes that the era of high costs and high deductible health plans increasingly makes health care unaffordable for many people, particularly as employees pay higher deductibles and copays and a larger share of the monthly health premium.

Across the U.S. last year, a family health plan cost an average of $23,621 for small employers with three to 199 employees, a 22% increase since 2018, and $24,401 for larger firms, up 21% in five years, according to the 2023 Employer Health Benefits survey by to health policy research nonprofit KFF that considered all types of health plans.

Employees on average paid $6,595 in 2023 for their share of the premium for a family plan and $1,401 for single coverage, according to KFF. One-quarter of people enrolled in a family plan had an annual deductible of $6,000 or more and 17% had deductibles of $5,000 to $5,999.

Another 24% of family plans had deductibles of $3,000 to $3,999, and 37% came with $2,000 to $2,999 deductibles.

The high costs for coverage and high out-of-pocket costs for employees also have created collection problems for care providers when patients are unable to pay their copay or what they owe prior to meeting their annual deductible, Jansen said, noting the process leads people to avoid seeking needed care.

“We think that if people are avoiding health care because of cost, this is one way to begin to challenge that,” he said. “The concept here is can we can make health care better by focusing on who we contract with to deliver health care and how those people get paid for it. If we can do that, we can lower the cost for the employer and increase the access and decrease the headaches that health systems and providers have on the whole revenue side.”

One question comes to mind:  Has DIFS approved this form of health care insurance?