The City of Houston said it has saved more than $42 million in healthcare costs in the past three years through the use narrow networks, accountable care and other key programs that tie in with the healthcare industry's shift to value over volume.
According to city officials, Houston, which employs 21,000 and by extension insures 54,000, faced healthcare costs in 2010 that were expected to balloon to more than $330 million, prompting a host of changes in benefits, including narrow networks.
That included partnering with KelseyCare ACO, which limits patients to a network of 20 clinics in the area. The ACO also partners with CHI St. Luke’s Health – Medical Center in Sugar Land, The Vintage and The Woodlands, Clear Lake Regional Medical Center, The Woman’s Hospital of Texas and Texas Children’s Hospital for hospital service. Officials said 75 percent of employees chose narrow networks -- with the bulk choosing the KelseyCare ACO option --over a high-deductible plan.
Houston also switched to a self-funded insurance model.
It also pushed generic pharmaceuticals, hitting 87 percent utilization in the past four years. The program offers generic drugs for asthma, diabetes, hypertension, cardiovascular disease and cholesterol without copays, a move intended to lower costs from emergency room visits.
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Much like other programs tied to value, Houston shifted its focus to prevention and maintenance. Employees were asked to take Health Risk Assessments and participate in biometric screenings and wellness activities or face a surcharge added to monthly premiums.
The surveys also helped the city to find out which employees had chronic conditions that were going untreated, including hypertension, diabetes and stage IV cancer, a discovery that caused costs to rise in the first year of the program.
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“Approximately 9 percent of our members have diabetes,” said Omar Reid, the city’s human resources director, in a statement. “The HRA gave us valuable data on how and what to focus on through our revamped benefits strategy – no one realized how prevalent diabetes or high cholesterol was in our workforce. People began receiving the appropriate care to help them manage their chronic diseases.”
While many employers are passing on higher healthcare costs to employees in the form of high-deductible plans, Houston is one of a few employers that is experimenting with narrow networks, ACOs, wellness programs and other ways to rein in costs by managing the health of their staffs.
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In Seattle, Boeing became one of the first big businesses to create its own health plan through an ACO partnership with Providence-Swedish Health Alliance and UW Medicine. Boeing’s “preferred provider” narrow network limits providers, but also offers perks such as no-copay primary care and full coverage for generic medications.
Houston officials said it has held annual increases to 1.1 percent for healthcare costs since changing its benefits. Emergency room admissions among staff are down 9 percent and average patient bed days have decreased by 29 percent.
Twitter: @HenryPowderly