Corporate America is cutting out insurers
A number of large employers are trying to negotiate reimbursements rates directly with health care providers, rather than going through an insurer.
Corporate America is beginning to reassess its relationship with health insurers. Exasperated by ever-rising health care costs, major companies are increasingly seeking alternatives to traditional health insurance plans for their employees.
A number of large employers are trying to negotiate reimbursements rates directly with health care providers, rather than going through an insurer. Among those choosing that route are Walmart, Whole Foods, Boeing, Cisco, Lowes and Intel.
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“Before they were simply saying ‘Okay, our vendor is going to help us with this,’” John Jackson of Stanford Health, a provider that a number of large employers have negotiated with to provide care to employees, tells Reuters. “Many are no longer willing to do that.”
Cisco is offering its employees the option of opting out of traditional insurance and getting coverage through a deal that the company has negotiated directly with Stanford Health. Workers who have taken that option pay 10 percent less than those who have remained in traditional insurance, a company representative tells Reuters.
Stanford is reimbursed based on a number of metrics geared towards reducing costs for patients and the employer. It is subject to bonuses and penalties based on its performance.
Whole Foods worked out a similar arrangement with Adventist, a 19-hospital provider.
Providers are not sorry to see less of insurers either. Even though employers are ditching insurers as a way to lower costs, they tend to grant hospitals more leeway in determining how to treat patients, whereas insurers often require “prior authorization” for certain prescriptions or services.
Moreover, with the increasing consolidation of the insurance industry, providers worry that one or two major insurers will be determining whether they get business or not.
“These large providers are thinking, ‘Hang on a second, I could get carved out here,’” Tom Robinson, partner at Oliver Wyman, a consulting firm, told Modern Healthcare in January.