First-of-Its-Kind Agreement Between HMO and PSO for Medicare HMO Product

Strategic Insights -

MedStep, a subsidiary of Humana Inc., has reached a definitive agreement with United Health of Wisconsin Insurance Company Inc. to develop and implement a Medicare HMO product in the Fox Valley region of Wisconsin. This multiyear agreement will allow MedStep to assist with product development, state and federal filings, marketing, and customer service, in exchange for a percentage of the Medicare HMO reimbursements United Health receives. The agreement is significant as it is the first between an HMO and a PSO (Provider-Sponsored Organization).

Key Takeaways:

  • The agreement between MedStep and United Health of Wisconsin Insurance Company Inc. will enable the latter to serve Medicare customers in the Fox Valley region of Wisconsin.
  • MedStep will assist with product development, state and federal filings, marketing, and customer service, and will earn a percentage of the Medicare HMO reimbursements United Health receives.
  • The agreement is the first of its kind between an HMO (Health Maintenance Organization) and a PSO (Provider-Sponsored Organization).
  • United Health of Wisconsin Insurance Company Inc. currently serves over 200,000 customers through its Commercial health products.
  • MedStep's service will allow United Health of Wisconsin to keep its startup costs down while leveraging MedStep/Humana's experience in managing and marketing a Medicare HMO product.
  • The service area for the Medicare HMO product includes eight Wisconsin counties: Shawano, Waupaca, Outagamie, Brown, Waushara, Winnebago, Calumet, and Green Lake.
  • United Health of Wisconsin hopes to enroll its first Medicare members in early 1999, pending contract approval by the Health Care Financing Administration (HCFA).

Statistics:

  • United Health of Wisconsin Insurance Company Inc. serves over 200,000 customers through its Commercial health products.
  • MedStep will earn a percentage of the Medicare HMO reimbursements United Health of Wisconsin receives.
  • The anticipated service area for the Medicare HMO product includes eight Wisconsin counties.
  • United Health of Wisconsin hopes to enroll its first Medicare members in early 1999, pending contract approval by the HCFA.
  • MedStep is a subsidiary of Humana Inc., one of the nation's largest publicly traded managed health care companies with approximately 6.2 million medical members.

Sources:

  • MedStep press release, PRNewswire, May 15, 1998
  • United Health of Wisconsin Insurance Company Inc. website: http://www.unitedhealth.org/
  • Humana Inc. website: http://www.humana.com/
  • PRNewswire, May 15, 1998.