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June 23, 2016

How Boeing and Lowe's are working with hospitals in a whole new way

Daily Briefing

Boeing announced Tuesday it will contract directly with MemorialCare Health System to provide the aerospace company's Southern California-based employees and their dependents with access to the system's ACO.

The agreement is the first direct contract in California between a provider and a large employer, according to the Orange County Register. Financial terms of the five-year deal were not disclosed.

Under the agreement, MemorialCare Health Alliance ACO will be available to 15,000 Boeing employees and their dependents in the region alongside other plans during the company's open enrollment. The ACO includes nine hospitals, more than 2,400 physicians and providers, and 71 surgery centers, freestanding clinics, and urgent care facilities.

How Henry Ford Health System is preparing for direct contracting

Enrollees will have no copayments for primary care visits or generic drugs. All emergency care will be covered as in-network, and beneficiaries can choose in-network specialists without a referral. Boeing's national insurance administrator, Blue Cross and Blue Shield of Illinois, will process claims and handle other third-party administrative tasks.

"More employers are interested in moving in [the] direction" of contracting directly with providers, says MemorialCare CEO Barry Arbuckle. "This is an extraordinarily innovative relationship between a major employer and a health system."

The arrangement, Arbuckle adds, gives MemorialCare "the ability to manage the care of all these folks across the entire continuum to work on prevention and wellness and disease management."

Boeing's move is the latest in a series of value-based care arrangements between large employers and health systems, which could become more common as companies look to address rising insurance costs.

"As providers get more experience with being part of Accountable Care Organizations and managing risk in the sense of setting fees for the employer at levels they think can cover their costs, more of them are going to be interested," Janet Coffman, an associate professor of health policy at the University of California, San Francisco, tells the Los Angeles Times.

Boeing has previously entered into direct contracts with ACOs in Washington state, Missouri, and South Carolina. Jeff White, the company's director of health care strategy, says the results have been positive so far.

"We're satisfied that the quality markers are generally moving in the right direction," White said. "We've done some focus groups, and people rate the program really high. A lot of the goals we're trying to accomplish will be accomplished over many years."

Other companies are making similar moves. United Airlines has contracted with Illinois-based Rush University Medical Center to offer hip and knee replacements and spine-fusion surgeries to all of United's 80,000 employees and their dependents in the United States. Home improvement company Lowe's offers no-cost surgeries to all employees that choose care at a select number of prestigious hospitals around the nation with which Lowe's has a bundled payment contract (Terhune, California Healthline, 6/21; Perkes, Orange County Register, 6/21; Masunaga, Los Angeles Times, 6/21; MemorialCare Health System release, 6/21).

Where the ACOs are

Where the Medicare ACOs are

There are 9 Pioneer, 433 Shared Savings Program, and 20 Next Generation ACOs as of April 2016.

See the rapid growth of Medicare accountable care organizations and track developments in Medicare payment innovation.


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