Slim­ming op­tions

In­tel adopts nar­row net­work to bet­ter man­age care

Modern Healthcare - - THE WEEK IN HEALTHCARE - Me­lanie Evans

Dis­sat­is­fied with pre­vi­ous cost and qual­ity ef­forts, com­puter chip gi­ant In­tel Corp. has en­tered an un­usual di­rect con­tract with Pres­by­te­rian Health­care Ser­vices for a nar­row-net­work, ac­count­able care-style ar­range­ment for its em­ploy­ees in New Mex­ico.

The ar­range­ment, which started in Jan­uary, cov­ers about 5,400 in­di­vid­u­als at In­tel’s man­u­fac­tur­ing plant in Rio Ran­cho, N.M. The Cal­i­for­nia-based soft­ware de­vel­oper and com­puter chip maker, which is self-in­sured, de­cided to con­tract di­rectly with a sin­gle provider sys­tem rather than work­ing with a national com­mer­cial health in­surer this year to ad­min­is­ter its ben­e­fits for some of its eight health plans op­tions. In­tel de­clined to name the in­surer.

The deal of­fers In­tel em­ploy­ees a nar­row net­work of Pres­by­te­rian providers as two of four health plan op­tions, which will en­able the health sys­tem to bet­ter man­age care, said Tami Gra­ham, In­tel’s global ben­e­fits de­sign man­ager. Out­side the net­work, In­tel em­ploy­ees are “get­ting care that’s not co­or­di­nated and may not be in their best in­ter­est,” she said. Pres­by­te­rian’s physi­cians can do more to con­trol costs when pa­tients can­not roam to in­de­pen­dent or ri­val providers. In­tel em­ploy­ees who se­lected Pres­by­te­rian’s nar­row net­work cov­er­age will pay more for seek­ing care else­where.

Pres­by­te­rian, which now op­er­ates a clinic at In­tel’s Rio Ran­cho plant, will re­ceive a bonus if it meets qual­ity goals and In­tel’s em­ployee health­care costs stay un­der a set tar­get. It also agreed to ac­cept a fi­nan­cial penalty if costs ex­ceed that tar­get. Pres­by­te­rian has its own in­sur­ance arm, eight New Mex­ico hos­pi­tals and a med­i­cal group with more than 400 physi­cians.

Brian DeVore, di­rec­tor of health­care strat­egy and ecosys­tem at In­tel, said In­tel’s new di­rect con­tract­ing ini­tia­tive fol­lows the com­pany’s pre­vi­ous ef­forts to slow spend­ing and im­prove work­ers’ health through con­sumer-di­rected health plan de­signs, well­ness checks and bio­met­ric screen­ing. “I think we’ve done what most em­ploy­ers have done,” he said. “We re­al­ized that wasn’t go­ing to bend the trend.”

In­tel pro­jected the com­pany could save $8 mil­lion to $10 mil­lion through 2017 with Pres­by­te­rian as bet­ter care im­proves pop­u­la­tion health, though costs are ini­tially ex­pected to rise, Gra­ham said.

Pres­by­te­rian of­fi­cials saw an op­por­tu­nity to gain ex­pe­ri­ence with a large, in­no­va­tive em­ployer that could help in­form other di­rect con­tracts with other com­pa­nies. “This is what we must get good at,” said Lau­ren Cates, Pres­by­te­rian’s se­nior vice pres­i­dent of mar­ket de­vel­op­ment and op­er­a­tional plan­ning. “This is our first ex­pe­ri­ence in an em­ployer-driven ACO,” she said. “We be­lieve there’s a lot of po­ten­tial for this in the fu­ture.”

The move goes be­yond an ear­lier ef­fort by In­tel to work di­rectly with two Ore­gon hos­pi­tal sys­tems. And it’s more sweep­ing than di­rect provider con­tracts by other ma­jor em­ploy­ers, whose con­tracts typ­i­cally are limited to spe­cific pro­ce­dures and con­di­tions. In­tel will ex­pand the di­rect-con­tract­ing, nar­row-net­work ap­proach to other mar­kets, Gra­ham said. Its health ben­e­fits cov­ered roughly 127,000 peo­ple across the coun­try at the end of last year, pri­mar­ily in Arizona, Cal­i­for­nia, New Mex­ico and Ore­gon.

Em­ploy­ers have for years sought to use their clout as buy­ers to ex­tract lower pre­mium in­creases and higher qual­ity of care from in­sur­ers and providers. But that ef­fort has in­ten­si­fied as com­pa­nies look for more trac­tion to slow-ris­ing health­care costs. “Get­ting the health­care sys­tem to change is re­ally, re­ally, re­ally hard,” said Gra­ham, who said the com­pany has learned from its col­lab­o­ra­tive work since 2009 with Prov­i­dence Health & Ser­vices, Tual­ity Health­care and Cigna Corp.

There, In­tel and its part­ners in Ore­gon used to­tal qual­ity im­prove­ment meth­ods to de­velop bet­ter care pro­cesses for back pain, hip, knee, shoul­der and headache treat­ment. In­tel and its part­ners said one re­sult was $2 mil­lion in ad­min­is­tra­tive sav­ings in 2011, from re­duced costs for pa­tient sched­ul­ing and regis­tra­tion, for ex­am­ple.

Helen Dar­ling, pres­i­dent and CEO of the National Busi­ness Group on Health, said em­ploy­ers con­tract­ing di­rectly with providers “is ac­tu­ally the next log­i­cal step. It should have been done ear­lier, but it’s not as easy as it sounds.”

Few em­ploy­ers sur­veyed by the busi­ness group have di­rect con­tracts with provider sys­tems. The NBGH sur­vey found that just 7% of the 583 large em­ploy­ers with a com­bined 11.3 mil­lion full-time em­ploy­ees who re­sponded to the poll had such di­rect con­tracts. An­other 6% said such con­tracts were planned for next year. “There’s more in­ter­est than ac­tual ac­tion,” Dar­ling said. But that in­ter­est, she added, is “in­tense.”

Dar­ling said em­ploy­ers and health sys­tems are now bet­ter pre­pared for di­rect con­tracts af­ter re­cent in­vest­ments to di­ver­sify op­er­a­tions to in­clude com­plex ser­vices typ­i­cally un­der­taken by in­sur­ers, such as claims pro­cess­ing or con­tract ne­go­ti­a­tions.

In­tel joins Wal-Mart in this lat­est move to use more mus­cle and talk di­rectly with health sys­tems. The Ben­tonville, Ark.-based re­tail gi­ant said last Oc­to­ber it would fly in­sured

em­ploy­ees who need cer­tain heart, spine and trans­plant op­er­a­tions to six health sys­tems with strong qual­ity mea­sures for those op­er­a­tions. Wal-Mart work­ers will pay noth­ing for med­i­cal care or travel to those cen­ters.

Mean­while, some provider sys­tems are in­vest­ing in strate­gies to cap­i­tal­ize on em­ploy­ers’ de­mand for more sav­ings and com­pa­nies’ will­ing­ness to work more closely with providers.

One of the largest U.S. health sys­tems is ex­pand­ing into in­sur­ance mar­kets with plans to con­tract di­rectly with some em­ploy­ers. Catholic Health Ini­tia­tives, En­gle­wood, Colo., re­cently ac­quired a ma­jor­ity stake in a Wash­ing­ton state in­surer, and more deals by CHI are ex­pected.

In Wis­con­sin, Aurora Health Care has be­gun to of­fer em­ploy­ers a “price guar­an­tee” un­der new con­tracts with Aetna that be­gan in Jan­uary. Em­ploy­ers that en­ter into the price-guar­an­tee deals could see costs drop 10% on aver­age, ac­cord­ing to Aetna.

Other ob­servers say di­rect con­tract­ing be­tween em­ploy­ers and providers to pro­vide all em­ployee health­care will take time. Steven Glass, chief fi­nan­cial of­fi­cer for the Cleve­land Clinic, said his sys­tem will “mi­grate down that path” but that ex­ist­ing con­tracts with mul­ti­ple em­ploy­ers such as Lowe’s, Boe­ing and Wal­Mart are more limited in scope.

In New Mex­ico, In­tel and Pres­by­te­rian worked for about a year to reach an agree­ment. The con­tract in­cludes qual­ity mea­sures such as pa­tient sat­is­fac­tion, how quickly nurses’ re­spond to pa­tients’ re­quests, and how of­ten adults com­plete a de­pres­sion screen­ing tool.

In early talks with Pres­by­te­rian, In­tel of­fi­cials bluntly de­scribed the wide variation in costs and health­care de­liv­ery they found af­ter an­a­lyz­ing health­care claims across the com­pany, said Pres­by­te­rian Pres­i­dent and CEO Jim Hin­ton. They told him In­tel couldn’t sell its com­puter chips if their qual­ity and costs var­ied as much as health­care qual­ity var­ied.

Em­ploy­ers and in­sur­ers in­creas­ingly are turn­ing to nar­row-net­work plans as a way to hold down costs and im­prove qual­ity. Nar­row net­works gen­er­ally re­quire en­rollees to pay more or all of the med­i­cal bills if they seek care out­side the net­work com­pared with doc­tors and hos­pi­tals in­side the net­work. Many health plans of­fered on the new state in­sur­ance ex­changes this fall are ex­pected to fea­ture nar­row net­works.

Lisa Gold­stein, an an­a­lyst with Moody’s In­vestors Ser­vice, said nar­row net­works are not with­out risks as providers typ­i­cally agree to rate dis­counts in ex­change for po­ten­tial vol­ume. Such con­tracts likely will un­dergo mod­i­fi­ca­tion and cor­rec­tions as providers gain ex­pe­ri­ence, she said.

In­tel con­tracted di­rectly with Pres­by­te­rian Health­care Ser­vices to pro­vide health ben­e­fits for Rio Ran­cho, N.M., em­ploy­ees.

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