About 15,000 Boeing employees and their dependents in Southern California will have what the company hails as a “transformational” new health plan option for 2017: A direct-contracted accountable care organization (ACO) plan with MemorialCare, a large locally based health system that has partnered with a variety of other local providers.

The new “Preferred Partnership” arrangement, available to employees as both a PPO plan and a high-deductible alternative, follows the earlier introduction of the same basic plan to Boeing employees in Seattle and St. Louis.

Boeing employees primarily in Orange County, South Bay and Long Beach will still be able to stick with the company’s traditional PPO and high-deductible plans, as well as a Kaiser HMO, but might be lured by the financial advantages and prospect of superior care offered by the ACO. Although Boeing won’t predict how many employees will convert to the Preferred Partnership plan, a spokesman noted that similar initiatives at other locations had met or exceeded expectations.

An employee works near a 747-8 airplane at a Boeing facility. Employees and their dependents in Southern California will have “transformational” new health plan option next year. [Image credit: Bloomberg]
An employee works near a 747-8 airplane at a Boeing facility. Employees and their dependents in Southern California will have “transformational” new health plan option next year. [Image credit: Bloomberg]

The new value-based option, “Centers on keeping people healthy and out of the hospital by focusing on best practice, evidence-based prevention, diagnoses and treatments to identify and treat underlying health problems before they become chronic conditions,” Boeing states. Blue Cross and Blue Shield of Illinois, Boeing’s national insurance administrator, will process claims for the Preferred Partnership plan.

Growing trend?

ACOs put together by health plans such as Blue Cross Blue Shield of Massachusetts, as well as Medicare and Medicaid, have been in place for a few years, but ACOs designed and implemented by employers are relatively new.
Intel preceded Boeing in establishing a direct contract ACO in Arizona, and Lockheed Martin has also launched a similar effort. Disney is on a similar path in Orlando.

“I think there are going to be more employers doing direct contracting arrangements where they have large enough employee populations, whether it’s an ACO or rate guarantee model,” says Jeff Thompson, M.D., M.P.H. and a senior health management consultant with Willis Towers Watson.

A rule of thumb, according to Thompson, is that an employer needs a minimum of 5,000-10,000 employees in a given health care market to make a direct contracted arrangement financially feasible.

Large numbers of potential enrollees are needed to get the provider community’s attention and provide sufficiently robust actuarial data for health systems to price their services appropriately. A large-scale effort is also required to justify the massive administrative requirements and their associated costs on the part of the employer.

Beyond the size of the undertaking, direct contracting only appeals to employers with a certain mindset, says Brian Marcotte, CEO of the National Business Group on Health (NBGH). ”You need a progressive employer that wants to do something different to advance a more efficient delivery model, better population health management and risk-sharing on the total cost of care,” he says.

NBGH’s members are large, self-insured employers, but only a small percentage appear to be on the verge of establishing direct-contracting arrangements, according to Marcotte. Under the right conditions, however, he believes that employers are better positioned to than insurers to implement an ACO plan.

Narrow networks are a hallmark of ACO arrangements. But when health plans already have contracts with most of the providers in the community, it’s hard for them to “go narrow” and exclude many providers. Such an action could alienate those providers that have been bypassed, Marcotte says, potentially complicating the health plan’s negotiations on behalf of other local employers.

Under Boeing’s new “Preferred Partnership” plan, employees in Southern California will be offered “enhanced benefits and incentives at lower costs,” including “decreased paycheck deductions,” according to the company. Those who enroll in the high-deductible version of the plan will also receive higher contributions to their heath savings accounts.

Other plan features include:
· No co-pays for in-network primary care physician visits
· 100% coverage for generic drug prescriptions (although under the high-deductible plan, the deductible has to be met before this benefit kicks in)
· The ability to seek care from a network specialist without a primary care physician referral
· “Quicker access” to in-network providers and additional after-hours care
· Out-of-network emergency care that is covered at the same level as in-network emergency care

Achieving the plan’s goals for better health outcomes, more affordable costs and improvements in the patient experience, will require some trial and error, Thompson says. But as pioneering companies like Boeing get the formula right and demonstrate success, he predicts they will be joined by many other employers.

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