Intel takes initiative to control costs, qualityNews added by Benefits Pro on July 17, 2013

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By Dan Cook

In an effort to “bend the trend,” Intel has launched a health coverage initiative for 5,400 employees in New Mexico that could prove to be the template for the computer chip giant’s nationwide benefits plans.

Intel was frustrated with its previous efforts to gain more control over health coverage costs and to receive meaningful quality objectives from its insurance plan providers. So it scrapped its traditional coverage solutions and signed a direct contract with a large health care system, Presbyterian Healthcare Services, in New Mexico.

Intel's health coverage experiment has just passed the six-month point, and so far, the company claims it likes what it sees.

Essentially, Intel told Presbyterian it would steer a big chunk of business its way if it would agree to set quality and cost-of-coverage targets that both parties agreed upon. Presbyterian gets a bonus if it meets the objectives, and pays a “penalty” if it fails to do so.

Brian DeVore, director of healthcare strategy and ecosystem at Intel, told that Intel's decision to contract directly with a single provider came after many other attempts to make traditional plan coverage work.

“I think we’ve done what most employers have done,” he said. “We realized that wasn’t going to bend the trend.”

Presbyterian already ran a clinic at an Intel plant in New Mexico, so it was a known player to the company. It’s a major force in New Mexico’s healthcare industry, operating eight hospitals, employing more than 400 physicians and offering insurance coverage through its own subsidiary.

Intel employees have to pay a premium to go out of Presbyterian’s system. But the company said it believes they will get better medical care over the long haul by remaining within a single system where care is coordinated, consistent and responsive to its quest for meeting healthcare quality objectives.

Initially, Intel believes the alliance will cost the company more than the plans it replaced, but that trend is expected to reverse, delivering savings of between $8 million and $10 million by 2017.

With benefits plans covering some 127,000 Intel workers in four states, Intel expects to rolls out the New Mexico model if it produces the desired results.

Presbyterian likes the arrangement too, and thinks it will make it a healthcare leader.

“This is what we must get good at,” Lauren Cates, Presbyterian's senior vice president of market development and operational planning, told “We believe there’s a lot of potential for this in the future.”

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