October 4, 2019

Walmart will pay employees to see higher-quality doctors

Daily Briefing

    Walmart on Thursday announced that starting next year, it will test a program in certain markets that will financially incentivize employees to use doctors the company has determined are higher-quality than other doctors in the area.

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    Details on the program

    Walmart said the program will begin Jan. 1, 2020, and will be tested in northwestern Arkansas, central Florida, and the Dallas-Fort Worth area. The program is estimated to affect about 60,000 employees and dependents across the three test areas.

    Under the program, employees who use Walmart's "featured providers," will pay less out of pocket for care. Walmart is partnering with Embold Health, a data analytics company, to determine which providers are "appropriate, effective, and cost-efficient," and will be designated as a "feature provider." Embold CEO Daniel Stein was a Walmart executive from 2013 to 2017. 

    Lisa Woods, Walmart's senior director of U.S. benefits, said the program will allow patients to "get information based on actual data and proven results" rather than "relying on word of mouth or social media to find a provider."

    The test program will include providers in:

    • Cardiology;
    • Endocrinology;
    • Obstetrics;
    • Oncology;
    • Orthopedics;
    • Primary care; and
    • Pulmonology.

    Walmart did not disclose what percentage of doctors in the three test areas will receive the "featured provider" distinction, nor how much employees will save by using those providers.

    Walmart's approach with this program is similar to the "centers of excellence" (COE) program it launched in 2012, which has directed its employees and dependents to better-performing hospitals for certain cancer evaluations, organ transplants, and common surgeries like heart, hip, knee replacement, and spinal procedures.

    According to internal data, nearly half of Walmart employees who had spinal surgery or a medical evaluation without surgery did so at a COE site between 2015 and 2018. Surgery at a COE site costs about 8% more than elsewhere, but the benefits have outweighed that cost, according to Woods and a group of colleagues who authored a piece on the program earlier this year. For instance, employees are able to return to work sooner and are less likely to be readmitted to the hospital.

    "Associates came back saying, 'I didn't know health care could look like this,'" Woods said in a release. "They asked us to bring the same transparency, effectiveness and quality of care to their communities."

    Discussion

    Adam Stavisky, Walmart's SVP of U.S. benefits, said the goal of their featured providers program is to reduce the large amount of unnecessary care provided by doctors.

    "We hope to get a meaningful chunk of that removed from our costs and our associates' costs," he said. "How much can we save? We don't know, but we think it's material."

    Jay Wolfson, a professor at the University of South Florida's College of Public Health, said he believes "it's about time major employers take more of the health value associated with their employees and their employees' families under control. They're paying for it directly and they're paying for it indirectly."

    Wolfson said that Walmart is "large enough and smart enough that they can do it right and everyone else can learn."

    However, Ateev Mehrotra, associate professor of health care policy at Harvard Medical School, said Walmart's program could raise questions about how doctors are chosen to be featured providers, and whether that choice is related to lower cost or higher quality.

    "This sounds awesome and great in theory, to identify the best doctors you have for your employees to go to, but what is in the black box formula that Embold Health is using, and how much is it the cost and how much is quality of care?" Mehrotra said.

    According to Stein, Embold uses a variety of quality metrics that vary by specialty to rate physicians, including rates of cesarean sections for patients with low-risk pregnancies and infection rates for patients following elective knee or hip replacement. That criteria is shared with physicians so they know what areas they need to improve in, Stein said.

    However, Mehrotra said it could be difficult to identify which doctors provide high-quality care because many doctors work in large groups where patients may see multiple providers. He noted that employers typically rely on insurance companies to identify the best doctors within their networks. As a result, the initiative, Mehrotra said, "can only be seen as a failure of [Walmart's] health plans" (Galewitz, Kaiser Health News, 10/3; DiNatale, Tampa Bay Times, 10/3; Japsen, Forbes, 10/3; Walmart release, 10/3).

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