General Motors has made a deal with Henry Ford Health System, a Detroit-based hospital system, to provide a new health care plan to its salaried employees and their dependents in southeast Michigan, the Wall Street Journal reported on Monday. The optional ConnectedCare plan, which will be available to some 24,000 GM employees and their dependents starting next year, replaces traditional group health insurance with a direct-contract system wherein Henry Ford will manage nearly all of the participating employees’ health care needs.
The company’s existing health insurance options will remain available, but the ConnectedCare plan is expected to save them anywhere from $300 to $900 a year compared with the current cheapest option. According to a press release from the Henry Ford system, the plan will give GM employees access to more than 3,000 health care providers offering “a comprehensive range of health care services including primary care, more than 40 specialties, behavioral health services, hospitalization and emergency care as needed, as well as pharmacy and other services.”
Under the five-year contract, the hospital system agreed to specific goals for quality, cost and customer service. For instance, plan participants are promised same-day or next-day appointments with primary care physicians and appointments with specialists within 10 business days. They will also have access to a range of digital health tools, wellness services, and assistance in managing their care and choosing the right health care options, Henry Ford said in its statement.
Blue Cross Blue Shield of Michigan, GM’s insurance provider in that state, will continue to manage claims-processing and other functions, while again continuing to provide the PPO plans GM already offers its employees. ConnectedCare will not apply to GM’s large unionized workforce in Michigan, whose health benefits are negotiated under a labor agreement.
While direct contracts with providers remain unusual, some other large employers like Walmart have pursued more limited partnerships with hospital systems to provide specific services. Intel and Boeing have made broader deals with health care systems similar to GM’s arrangement with Henry Ford. A survey by the National Business Group on Health, released on Tuesday, found that the number of businesses pursuing direct-contract health plans is small but growing rapidly, from 3 percent of respondents in 2018 to 11 percent in 2019. Direct contracting between employers and specialized centers of excellence is also on the rise, from 12 percent this year to 18 percent next year.
The growing popularity of these direct partnerships is part of a broader trend in which US businesses are exploring alternatives to traditional group health insurance in order to manage rising health care costs. GM’s decision to pursue a direct-contract plan profile of this sort will raise the profile of direct-contract plans and may inspire more employers to explore them. Still, experts tell Employee Benefit News, these schemes are complicated to manage and may not be a realistic option for employers that don’t have the capacity of a behemoth like GM:
“It takes a lot in order to pull this type of agreement off,” [Bret Jackson, president of The Economic Alliance for Michigan,] says. “There has to be constant communication in terms of employee benefit owners, and you have to keep track of a lot of moving parts.”
Employers who enter into a direct contract with a healthcare provider need expertise and bandwidth, “a luxury that not many have,” adds Suzanne Delbanco, executive director of the Catalyst for Payment Reform, an employer-led health care think tank and advocacy group. That’s why Jackson says that while he expects other large employers to jump on the trend in the coming years, he doesn’t expect a widespread movement because “most employers aren’t in the right situation.”