General Motors is partnering with Henry Ford Health System to offer a new direct-to-employer health insurance option next year. The companies said the plan, called GM ConnectedCare, will save employees anywhere from $300 to $900 in annual payroll contributions compared to GM's current cheapest plan and will be available to nearly 24,000 GM employees in southeast Michigan.
The plan's annual deductibles will match those of GM's most inexpensive current plan: $1,500 for individuals. GM, which is self-insured, will continue to offer its other plans (PPOs with a wider range of choices, but higher premiums) in addition to ConnectedCare in 2019.
The Detroit, Michigan-based automaker's five-year contract with the 103-year-old hospital system requires all participating employees to receive all care, including routine checkups, surgeries and more, through Henry Ford Health System or pay out-of-network rates. The plan is not available to GM's unionized workforce, which receives health benefits under a labor agreement.
General Motors is the latest in a growing number of employers choosing to contract directly with providers for employee healthcare and eschew the traditional health benefits setup in an attempt to lower costs without sacrificing care quality.
Employers expect healthcare costs will increase 5.5% in 2018 following a 4.6% increase last year, according to a recent Willis Towers Watson survey. GM itself has seen its total healthcare costs increase by approximately 3-4% a year, according to Sheila Savageau, the company's U.S. healthcare leader.
Although only 6% of employers contract directly with providers, 22% are considering it for 2019, according to the survey. And, like GM, some of those companies are major players. Walmart, Whole Foods, Walt Disney, Boeing and Intel have all made inroads in negotiating their own terms with healthcare providers — some more ambitiously than others.
Although Walmart crafted limited deals with hospital systems for specific procedures, namely spinal surgeries, the latter four companies are having their healthcare providers manage almost all of their enrolled employees' care.
About 11% of employers said they mean to solidify such broad deals in 2019, according to a 170-employer survey by the National Business Group on Health — up from a mere 3% in last year's poll.
And for healthcare providers, such contracts allow experimentation with a guaranteed volume of patients and a low threshold of risk.
Yet not all is rosy in the direct-to-provider space, as such contracts can be difficult to sustain due to ambitious targets and stringent financial requirements.
Henry Ford Health System attempted a similar setup in 1998 called Partnership Health, but it only lasted a few years due to low participation. More recently, Providence St. Joseph ended its participation in Boeing's direct-contract program last year, citing "business" as the reason for the contract termination.
Another potential downside is for patients who could face restricted provider and facility options.
Yet the direct-to-provider move, and the dissatisfaction with the status quo it implies, may give payers the necessary jolt to revamp their platforms and provide more customization for employers.
Henry Ford Health System will have total cost targets, along with quality and customer service goals, within the new system. If it achieves or exceeds the cost objectives, GM and the provider will share the savings. But, if the six-hospital system's costs are too high, it will credit GM for the unforeseen expenses.
In this way, the two companies share risk and reward, and turn away from models that incentivize volume of medical services over value.
The healthcare contract is the first of its kind for both GM and Henry Ford, and insurers will still play a role — albeit a supporting one. The two companies are partnering with Blue Cross Blue Shield of Michigan to manage claims-processing, pharmacy benefits and other functions. The insurer will administer ConnectedCare in addition to GM's self-insured health plans.
ConnectedCare will provide access to more than 3,000 providers in the seven participating Michigan counties. Patients who select the option will receive a range of services including primary care, more than 40 specialties, behavioral health services, hospitalization and emergency care and pharmacy services, according to Monday's press release.
Along with including same-day appointments with primary care doctors, the plan touts telehealth options such as allowing employees to interact with doctors by phone, video or smartphone app.