Starting last March, retail giant Walmart now requires that its employees use a select network of 800 diagnostic imaging providers, or face additional out-of-pocket costs, according to an article this week from Kaiser Health News. Lisa Woods, Walmart’s senior director of benefits design, said high error rates in imaging studies were the driver for establishing the program, with the perspective that “a quality MRI or CT scan can improve the accuracy of diagnoses early in the care journey.”
The network was created in partnership with New York-based Covera Health, a technology company that has amassed information on thousands of imaging facilities nationwide, and uses independent radiologists to evaluate a sample of studies to determine facility and radiologist error rates. According to the article, while many employers have steered employees to lower-cost imaging networks, Walmart is the first to do so based on quality of the studies.
Whether this network will be effective in achieving its stated goal—reducing misdiagnoses that lead to unnecessary care and surgery—remains an open question. Poor-quality imaging undoubtedly leads to repeat studies, which carry significant costs. But many other factors (clinical judgement, incentives, patient preferences) contribute to the decision to perform surgery. Defining imaging “quality” beyond the blunt measures of repeat rates, technical adequacy and radiologist sub-specialization is highly complex, and requires correlation with pathology and clinical outcomes data—a high bar for an outsourced analytics provider.
Despite Walmart’s goals, it will be difficult for imaging providers to differentiate their services solely on quality. The high variability in imaging prices is well-documented, and choice of provider is largely made by consumers, for whom imaging is a commodity service.
Without an activist employer or payer to steer them, consumers will likely continue to choose their imaging providers based on their doctor’s recommendation and out-of-pocket costs.
Penn State Health and Highmark Health have inked a $1 billion deal to form a value-based community care network that aims to improve population health and protect market share by keeping more patients in the region, especially for complex care.
Anchored by the Milton S. Hershey Medical Center, the plan also calls for collaboration with community physicians and will include new facilities and co-branded health insurance products.
The move doesn’t affect existing agreements: Penn State Health can still partner with other health insurance companies, and Highmark will continue to partner with other providers.
“Penn State Health will offer more primary, specialty and acute care locations across central Pennsylvania so that [patients] will have easier access to our care, right in the communities where they live,” A. Craig Hillemeier, CEO of Penn State Health, said in an announcement. “Our two organizations share the belief that people facing life-changing diagnoses should be able to get the care they need as close to home as possible.”
Highmark Health will join Penn State as a member of Penn State Health with a minority interest. The payer will get up to three seats on the 15-member board of directors.
“We want to collaborate with forward-thinking partners who, like us, are committed to creating a positive healthcare experience for members and patients,” Highmark Health CEO David Holmberg said in the announcement.
Value-based care and population health continue to drive deals such as this one, including in the competitive Pennsylvania market. Earlier this year, PinnacleHealth announced that it would partner with the University of Pittsburgh Medical Center, the state’s largest integrated health system, and also agreed to acquire four Central Pennsylvania hospitals from Community Health Systems.
You probably chafe a bit every time you learn that a certain doctor or hospital isn’t part of your insurance network. Narrowing the scope of your network helps insurers save money. They can drive hard bargains with doctors and hospitals to get lower prices and walk away from higher-priced ones.
Increasingly, insurers are offering narrow network plans. Would you enroll in one? So long as quality doesn’t suffer, consumers should welcome the lower premiums they may offer.
Researchers at the Leonard Davis Institute at Penn analyzed the relationship between network size and premiums for plans offered in the Affordable Care Act marketplaces. Plans with very narrow networks (covering care by less than 10 percent of physicians) charged 6.7 percent lower premiums than plans with much broader networks (covering care by up to 60 percent of physicians). This translates into an annual savings for an individual of between $212 and $339, depending on age and family size. For a young family of four, the savings could reach nearly $700 per year.
“Marketplace consumers are looking for value,” said Daniel Polsky, the University of Pennsylvania health economist who led the study. “That level of savings could be a very good deal for consumers, but whether these plans provide value depends on how they are achieving those savings.”
One way plans might save money could make it harder for patients to get care — so that they get less of it. Narrow network plans may do this if they don’t cover enough nearby providers, with the ones they do cover too busy to take new patients in a timely fashion. Clearly this would be especially problematic if appointments with one’s preferred primary care doctor are hard to obtain.
Are today’s narrow network plans actually doing this? Until recently, we had no data to answer this question. But two studies published earlier this year — one focused onMassachusetts, the other on California — provide some insight.
Boeing Contracts Directly With California Health System For Employee Benefits
In another sign of growing frustration with rising health costs, aerospace giant Boeing Co. has agreed to contract directly for employee benefits with a major health system in Southern California, bypassing the conventional insurance model.
The move, announced Tuesday, marks the expansion of Boeing’s direct-contracting approach, which it has already implemented in recent years in Seattle, St. Louis and Charleston, S.C.
Other large employers are also pursuing this idea in regions where they have big concentrations of workers. In some cases, they refer employees to nationally top-performing hospitals for select surgeries.
MemorialCare Health System said Chicago-based Boeing selected it from a group of bidders for the five-year contract in Southern California, where the company has roughly 37,000 employees and dependents. Financial terms weren’t disclosed.
“More employers are interested in moving in this direction,” said Barry Arbuckle, chief executive of the MemorialCare Health System, based in Fountain Valley, California. “It reflects the desire of these employers to participate in bending the cost curve for health care, and it allows the provider to have a more unfettered relationship with the employer and employees.”
Though recent payer mergers will have a big impact on the industry, it’s doubtful that impact will be related to provider reimbursement. SafaviThat’s according to Kaveh Safavi, senior managing director for consulting firm Accenture’s global healthcare business.
Safavi says the goal behind the payer mergers is to reduce the cost of doing business, not to reduce reimbursement. Insurance is a highly regulated business, and payers are trying to remain profitable and sustainable over time, he says.
“The profit margin for payers is typically 5%. If they’re going to plan for the future, payers have to lower the cost of doing business. By merging, these payers can become more competitive and keep their administrative costs low.”