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Analysis

Walmart Escalates Strategy to Solve Employee Healthcare

By Bruce Japsen  
   November 15, 2018

The deals Walmart is signing with providers mean a guaranteed stream of patients to hospitals.

Walmart is strengthening its relationships with health systems across the country, launching insurance products tied to value-based contracts with doctors and hospitals caring for the retail giant's more than 1 million U.S. employees.

The new approaches being offered by Walmart to an increasing number of their employees in certain regions of the country come as the retailer looks to reduce employer health costs while improving quality of care offered to workers. It also could open a window into the kinds of partnerships retailers like Amazon and CVS Health could unveil once the online retailer gets deeper into healthcare and the pharmacy chain completes its merger with Aetna.

Related: When Retail Giants Like Walmart and Amazon Invade Healthcare

And for health systems, the deals Walmart is signing with providers mean a guaranteed stream of patients when the retailer contracts to send them to doctors and hospitals for improved health outcomes.

"Walmart has been quietly going about doing things that are innovative," said David Carmouche, MD, president of Ochsner Health Network, which last month announced it was offering the Ochsner Accountable Care Plan to Walmart workers in the New Orleans Metro, Baton Rouge, and North Shore areas of southern Louisiana.

"Walmart and Ochsner Health Network came together with the common goal of reducing healthcare costs, while focusing on improved quality and patient experience," Carmouche said. "Walmart associates now have a plan that simplifies copays, coordinates care, and provides access to thousands of providers in dozens of locations.”

Walmart Inks 10 Health System Deals
 

The Ochsner Accountable Care Plan is the tenth direct-contracting relationship Walmart has launched with a health system or hospital in the U.S. since 2016, the retailer confirmed. Walmart employees began selecting the Ochsner plan during this fall's open enrollment effective for the 2019 benefit year that begins in January.

After two years of testing direct-contracting relationships with medical care providers in select markets, Walmart executives say they have seen enough results to continue forming such partnerships. A similar plan has been launched with Memorial Hermann Health System in the Houston area effective for select Walmart workers for 2019.

Walmart also has relationships with accountable care organizations (ACO) linked to other health systems including Banner Health in Arizona; Emory Healthcare in Atlanta; Mercy Health System in northwest Arkansas, Oklahoma City, southwest and east central Missouri, and St. Louis; Presbyterian Healthcare Services in Albuquerque and Santa Fe; St Luke's in Boise, Idaho; and UnityPoint in parts of Iowa and western Illinois.

In these markets like Ochsner's, Walmart offers health plans linked to ACOs that include doctors and hospitals in the ACO networks. A third-party administrator works with Walmart and the ACOs to administer the employee medical claims. An ACO includes doctors, hospitals, and other providers, contracting with employers and health insurers to improve quality and health outcomes, lower costs, and keep any money saved from year to year based on the arrangement with the health plan.

The Ochsner Accountable Care Plan is lower cost to Walmart and Sam's Club workers than traditional preferred-provider organization plans or high-deductible plans that include a health savings account that employees can already choose given the nature of the relationship with Ochsner providers.

"We spend a lot of time talking about quality and appropriateness of care," Lisa Woods, senior director, plan design and benefits at Walmart said in an interview. "The reality is, we are testing and piloting things to see what works and what doesn't work. We are still rookies in the ACO world."

But Woods said Walmart is committed to value-based care models and the national trend moving away from fee-for-service medicine.

Walmart isn't ready to disclose specifically how much money has been saved or data on outcomes in specific markets. But Woods said executives like what they have been seeing in certain markets and are committed to growing the accountable care models.

"I am optimistic about a few things that we are seeing," Woods said. "We are seeing lower inpatient admits and lower ER rates. All of those things directionally are what you hope to see.”

To get better outcomes, Walmart said employees are more closely monitored by the providers in the closed system of the ACO. In the Ochsner plan, for example, employees who participate in the Ochsner Accountable Care Plan have access to patient engagement specialists via a 24-hour call center dedicated to employees in the health plan.

Walmart Vows to Share Best Practices
 

"Patients will be directed to the most appropriate care within the network," Ochsner and Walmart said in a joint statement announcing the plan last month. "Additionally, a coordinated complex-case management program will serve Walmart patients enrolled in the ACP."

Healthcare providers in the plan's network "either use or have access to" Ochsner's Epic electronic health record system, which executives involved say works to better coordinate care of Walmart employees and their families.

For now, Walmart's accountable care plans are only offered to its workers, and the retailer has no immediate plans to sell such health insurance products to the public at large. But Woods said its long-term goal is to produce reports on what the retailer learns to benefit the U.S. healthcare system at large. "Walmart is very committed to sharing what we learn," Woods said.

Bruce Japsen is a contributing editor for HealthLeaders.


KEY TAKEAWAYS

Walmart has launched 10 direct-contracting relationships with hospitals and health systems since 2016.

A third-party administrator works with Walmart and the ACOs to administer the employee medical claims.

From the provider perspective, these deals mean a guaranteed stream of patients.


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