UnitedHealthcare partnered with St. Luke’s Health System and Children’s Mercy in Kansas City to create a new narrow network commercial plan intended to offer a cheaper option.
The plan would only provide care at the St. Luke system that includes 18 hospitals and 130 physician offices and the children’s hospital.
UnitedHealthcare said in a release on Tuesday that the commercial plan, which becomes available on Jan. 1, will save up to 15% on their monthly premiums.
“We’re introducing Core Essential because we know that many employers in the Kansas City area are looking for ways to continue providing quality benefits to their employees but at a more affordable cost,” said Rob Broomfield, CEO of UnitedHealthcare of Kansas, in a statement on the new plan called Core Essential.
The plan will be available on Jan. 1 to all fully insured and self-funded employers across several counties in Kansas.
“Employers can also access the plan if a majority of their employees live in these five counties, even if their offices or facilities are located in other counties in Kansas and Missouri,” UnitedHealthcare said.
UnitedHealthcare and St. Luke’s already collaborate on an accountable care organization created back in 2017.
“Through the ACO, UnitedHealthcare is providing an enhanced level of data and support to Saint Luke’s to enable its physicians to improve healthcare quality and affordability by delivering more comprehensive and coordinated care to their patients,” the release said.
Narrow networks that restrict customers to certain providers or hospitals have been increasing in popularity as a cost-cutting measure in the health insurance industry. A majority of plans on the Affordable Care Act’s individual market exchanges feature narrow networks, according to a 2018 analysis from the consulting firm Avalere.
Another study from the American Economic Association found that reimbursement rates for Blue Shield HMO plans in California were 12% less to hospitals than PPO plans with broader provider networks. The study questioned though whether employers would embrace such plans as employees may be upset with clinicians being out of their network.