Anew deal with Corewell Health West expands on Lansing base Physicians Health PlanWest Michigan Care Network.
The contract with Corewell Health West began on January 1 and includes individual and group HMOs, PPOs, site plans and PHP Medicare policies. The contract covers all of Corewell Health West’s hospitals, urgent care, hospice and home health care, as well as outpatient care facilities in West Michigan.
The deal coincided with the signing of an agreement between the Corewell Health-owned Priority health and Sparrow Health SystemLansing Health System, which owns 65 percent of PHP. Covenant Healthcare in Saginaw owns 10 percent of PHP and University of Michigan Healthwhich is in the process of acquiring Sparrow, owns 25 percent.
PHP signed with Corewell Health under a reciprocity agreement that includes the Priority Health-Sparrow Health deal, said Jennifer Johnston, director of sales and marketing for PHP.
The contract benefits PHP members who live in the Grand Rapids area — particularly in eastern Kent County or Ionia County — and work in Lansing. Members residing in Lansing who work in Kent County now have access to access care in both markets.
“Our members who live in Kent County and counties bordering our current service area will have greater access to health care services available at Corewell Health’s hospitals, outpatient facilities and clinics. Likewise, the agreement is for Priority Health members to have access to care at Sparrow,” Johnston said. “When you think especially about people who live in Ionia County, they now have equidistant access to go west for care or travel east for care.” It’s just providing that access for people in that time of need.
PHP has approximately 70,000 members enrolled in group commercial, self-funded individual and Medicare health plans, primarily in mid-Michigan. That includes nearly 29,000 people enrolled in group and individual HMO policies and more than 7,400 Medicare members, according to PHP’s most recent quarterly financial reports to state regulators.
PHP is in talks with other health systems about contracts that will further expand the state’s network of care beyond the central Michigan area, Johnston said.
“We are always looking to expand our network of high-quality providers, so discussions are ongoing not only about how to expand our service area so that we can provide high-quality, affordable care to more Michiganders, but also to ensure that that these services are covered in network,” she said.
University of Michigan Health, which will become the majority owner of PHP after the proposed acquisition of Sparrow Health closes, “is always looking at how to partner with other hospital systems to provide care across the state,” Johnston said.
PHP’s current state-authorized service area does not include Kent County or Lake Michigan in West Michigan. The health plan would have to secure approval from state regulators to enter and sell health policies in those markets, which are largely controlled by Priority Health and Blue Cross Blue Shield of Michigan.
Johnston could not say whether PHP might seek that approval, “but certainly providing options for all of our audiences to give them greater access to high-quality, affordable care is something we always value,” she said.
Meanwhile, the new contract with Sparrow Health provides an opportunity for Priority Health to build a much larger market presence in the Lansing area, although growth may not come easily.
Blue Cross Blue Shield of Michigan holds a dominant 74 percent market share for health coverage in the Lansing Metropolitan Statistical Area across all plan types, according to the American Medical Association’s annual report on U.S. health plan market shares
“The competitive dynamic in Lansing is challenging, so we know there’s definitely opportunity there,” said Mike Jasperson, Priority Health’s senior vice president of provider network and health plan operations. “It takes time and effort to establish yourself in the market and know all the players and develop relationships.”
Finally, the signing of Sparrow Health after years of talks fills the last gap in Priority Health’s care network in the Lower Peninsula. The state’s second-largest health plan previously had a Lansing-only contract with McLaren Health.
The contract follows, but is not related to, Sparrow Health’s proposed merger with University of Michigan Health and began on Jan. 1. It covers all of Priority Health’s lines of business: group advertising, Medicare, Medicaid and individual coverage. All of Sparrow Health’s facilities and 500 affiliated physicians became in-network care providers for Priority Health, which previously had only a Medicare contract with the in-network health system for coverage.
Priority Health currently has more than 3,000 Medicare Advantage members and more than 3,000 sales groups in the Lansing area market, Jasperson said.
Signing Sparrow better allows Priority Health to appeal to employers based elsewhere that have an office and employees in the Lansing area, said Amy McCulloch, strategic consultant for benefits and people solutions in the Grand Rapids office of Lockton Companies.
“I think it’s going to be a big deal,” said McCulloch, who works with mid- and large-market employers. “For employers that have locations in the state where Priority Health is a viable option for them, but a location in Lansing has prevented them from really moving, those employers will come into play.”