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Cigna unit aids health systems entering growing value-based care market

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Cigna Corp. is positioning itself squarely within the health care industry's movement toward value-based care with the creation of a new subsidiary, CareAllies Inc., that will help providers transition away from fee-for-service to greater risk-sharing business models.

CareAllies, based in Piscataway, New Jersey, will give health care providers the guidance and technology needed to execute value-based care arrangements and improve quality of care and patient outcomes while increasing affordability for patients, employers and government payers, Cigna said Thursday in a statement.

“We wanted to have a separate company that enabled us to work with providers across all of their lines of business, whether it's government or commercial, as they work to navigate the transition away from fee-for-service and toward value-based payment. It's an opportunity to really have a different relationship with the provider as our customer,” Dr. Julian Harris, president of CareAllies, said Thursday.

Prior to joining Cigna last year, Dr. Harris served as associate director for health in the White House Office of Management and Budget overseeing spending and policy for programs such as Medicare and Medicaid.

The new company will help providers establish accountable care organizations or even their own health plans, Dr. Harris said.

The growth of provider-sponsored health plans is “a phenomenon in the marketplace, and it's something that we have a track record of doing successfully through some of the assets that we've built and others we've acquired. So there really are opportunities for partnership,” Dr. Harris said.

Cigna has joint venture health plans with St. Joseph Hoag Health in Orange County, California, and Seton Health Plan Inc. in Austin and Waco, Texas, according to the statement.

The insurer also has 150 accountable care arrangements with large physician groups, according to the statement.

CareAllies will offer technology systems for providers building value-based care models. For those who already have technology partners, CareAllies will offer advisory and management services “to really work hands-on with physicians and executives to help them understand how to succeed in risk-based arrangements,” Dr. Harris said.

CareAllies is similar to UnitedHealth Group Inc.'s health care services subsidiary, Optum Inc., said Vishnu Lekraj, senior equity analyst at Morningstar Inc. in Chicago.

Cigna is “trying to help their provider partners with tools to run a more value-based reimbursement scheme in order to facilitate the type of new reimbursement model that they are going to roll out” over the coming years, Mr. Lekraj said. It “makes a lot of sense.”

Moreover, “Once they do merge with Anthem (Inc.), they can take these capabilities and use them across the entire organization,” Mr. Lekraj said.

It also helps Cigna underwrite provider contracts, as the insurer will know exactly what services the provider is capable of and the goals providers will be able to meet.

“We really have an affordability crisis in this country, and I think there's a lot of work happening both from public payers and private payers to try to figure out how we can make health care more affordable for individual patients and their families and employers for government, local state and federal,” Dr. Harris said.