With Kaiser in sight, Anthem creates new plan with major California hospitals

Health insurer Anthem Blue Cross and seven competing health systems in Southern California are joining forces to create a new health plan that executives believe will enhance competition in the area while reducing healthcare costs.

Anthem, a subsidiary of Indianapolis-based WellPoint (which will be renamed Anthem later this year), said the new Anthem Blue Cross Vivity plan will be similar to an HMO. Vivity members will be able to go to hospitals and doctors at Cedars-Sinai Health System, Good Samaritan Hospital and UCLA Health, all in Los Angeles; MemorialCare Health System, based in Fountain Valley; PIH Health, Whittier; Torrance (Calif.) Memorial Medical Center; and Huntington Memorial Hospital, Pasadena, without having to pay a deductible—patients will only have to pay monthly premiums and copayments, which were not detailed.

The new plan is likely to shake up the California insurance market. Oakland-based Kaiser Permanente, one of the largest integrated health systems in the country, has traditionally dominated the state. Kaiser controls more than a third of the market, according to a report from the California HealthCare Foundation (PDF). Anthem, however, is Kaiser's biggest competitor with a 15% foothold and could gain more traction by adding some of Southern California's top academic and community hospitals.

Vivity also represents a blossoming type of insurance venture, one in which hospitals, physicians and insurers work together to move away from a fee-for-service structure and toward a value-based reimbursement plan that rewards high-quality and safe patient care. But the health plan is only one part of the joint venture. The health systems intend to eventually link their electronic health-record systems to better coordinate and analyze patient care.

Vivity will be offered to large employers next month and will go live Jan. 1. One large group, the California Public Employees' Retirement System, the second-largest buyer of health benefits in the country, has already agreed to use the network.

“This unprecedented partnership was created to provide employers and consumers with a unique healthcare offering,” Barry Arbuckle, CEO of MemorialCare, said in a release. “Anthem Blue Cross Vivity provides choice, convenience and affordable access to exceptional physicians and hospitals throughout our region.”

Anthem and the health systems have been planning the new HMO plan for more than a year.

Follow Bob Herman on Twitter: @MHbherman