The plan's growth “depends partly on the benefit platform for larger employers, many of whom have moved to high-deductible health plans and other consumer-directed plan offerings,” said Emma Hoo, a director at the Pacific Business Group on Health, a coalition of large employers.
Indeed, healthcare reform has spurred a major increase in insurers offering high-deductible plans—plans in which people generally pay lower premiums but must pay a substantial amount out of pocket for deductibles and coinsurance. The plans have become popular among large employers because they are thought to reduce medical costs. A recent survey from the National Business Group on Health found one-third of large companies expect to offer a high-deductible plan as their only benefit plan option in 2015, up from 22% in 2014.
Vivity moves in the opposite direction. Plan members will only have to pay monthly premium contributions and copayments, with no deductibles or coinsurance. The difference between Vivity and other HMOs, such as those offered by competitor Health Net, is that Vivity's network is not as narrow. It includes more than a dozen hospitals associated with seven health systems and thousands of physicians, notably the pricey and popular academic medical centers Cedars-Sinai Health System and UCLA Health and their affiliated physicians.
“They've been able to pull together some pretty prominent facilities and providers to build a nice network,” said David Cusano, senior research fellow at Georgetown University's Health Policy Institute. But Vivity, along with other narrow network plans, now has to prove it can be a competitive, cost-effective option for employers, he added.
Anthem Blue Cross West Region President Pam Kehaly told reporters Wednesday that premiums will be “lower than what exists on the market today.” That's part of the reason one of the largest healthcare purchasers in the country already has agreed to offer the new product to its members as the low-cost HMO option.
The California Public Employees' Retirement System, better known as CalPERS, buys more than $7.5 billion every year in health benefits for more than 1.3 million state and local government employees, school employees and their family members. About 220,000 of those beneficiaries reside in Los Angeles and Orange counties, where Vivity providers are located.
Ann Boynton, who oversees health policy benefits and planning for CalPERS, said Vivity's network appealed to her organization both because of the big-name providers involved and the relatively low premiums. CalPERS approved state and regional 2015 health premiums this past June, and Vivity appears to stack up well to the other health plans.
Anthem HMO Select, the Vivity product for 2015, will cost $493.40 per month for CalPERS individual members living in the Los Angeles area, Boynton said. That will be the total contribution amount for both the employer and employee, so the employee's share will be less. For a family, the monthly rate will be $1,282.84, while the rate for two-person households will be $986.80. Copays typically will be $20 for a doctor's office visit and $50 for the emergency room, which is waived if the patient is admitted.
Vivity's premiums are below next year's Los Angeles-area rates for Kaiser Permanente, the dominant health insurer in California, and some others, such as Blue Shield of California. Kaiser's plan for individuals, two-member households, and families will cost $521.18, $1,042.36, and $1,355.07, respectively. Blue Shield's Access+ HMO product will run $517.87, $1,035.74, and $1,346.46.
Boynton said Vivity combined the low premiums of a traditional HMO with a prestige provider network not usually associated with that type of plan. “As this (network) matures, the benefits to the members will be significant,” Boynton said.
Vivity will start out modestly, targeting only 15,000 or so members. “We want to keep growth fairly controlled until we figure this out,” Kehaly said.
Several large employers in the area did not return calls by deadline on whether they would consider offering the Vivity plan next year. Nestlé USA, the international food and drink conglomerate that has corporate and manufacturing locations in Glendale and Chatsworth, Calif., declined to comment.
One group of employers Vivity won't be attracting: healthcare systems that weren't included in the network. Tom Jackiewicz, CEO of University of Southern California Health, an academic medical system that includes physicians from the Keck School of Medicine, said they will not look to offer the plan to employees for 2015. But he's not miffed that USC Health, which has 25,000 employees, was excluded from Vivity. He said it's merely the “new world of healthcare.”
“There's going to be a lot of networks formed because of geographic location,” Jackiewicz said. “This is going to be a series of partnerships.
“You have to be focused on cost, service and quality,” he added. “If we get those things right in any network, it'll work.”