United Health, Sutter roll out HMO network

United Healthcare will roll out its Signature Value Alliance network geared toward smaller employers in all of Northern California in 2013, with Sutter Health serving as the foundation for the HMO product, the Minnesota-based health insurer said.

The network was first launched in Southern California in April of this year, with the aim of offering employers a more specific network of providers in exchange for lower premiums, while still offering access to traditional and deductible HMO plans.  It's geared toward employers with 51 or more employees.

The Signature Alliance product will be available throughout Northern California, including Marin, Sonoma and Solano counties, starting in January. The network includes 27 hospitals and nearly 12,600 physicians and specialists across Northern California,  with 1,670  across the North Bay and San Francisco. Other providers will be part of the network, including San Francisco-based physician group Brown & Toland and the San Jose Medical Group.  The HMO product will also include high-deductible options coupled with health savings accounts.

Jeff Dooley, senior vice president for United Healthcare in Northern California, said the motivation behind Signature Value product is twofold. For starters, it's aimed at keeping employer premiums lower while providing an integrated model and data sharing among providers to produce the best outcomes, he said.

Secondly, such smaller or narrow networks are increasingly being used by both insurers and employers to keep costs in check, and carriers are responding by rolling out more HMO options as a means of staying competitive with each other.

"We feel we've got a pretty tight network of physicians covering the Bay Area and beyond. It is a smaller network, but it's an integrated model of delivery that we've put together to, quite frankly, compete with some of the lower-cost competitors out there," Mr. Dooley said.

Such networks could be particularity beneficial for the North Bay, which has one of the highest medical spending rates in the state, according to Keith McNeil, a broker with The SSM Group, an employee benefits agency in Novato.

"The advent of narrow network health plans will definitely help keep costs down. We have seen that in Southern California," Mr. McNeil said. "The question will be whether local employers who buy insurance for their employees will be willing to make that switch from offering a plan that has a much broader list of providers to one that costs less but has a narrower network.

"It remains to be seen how quickly North Bay employers will make that decision, but since the North Bay is one of the most expensive healthcare areas in the state it might not take that long," he added.

Bill Gleeson, a senior spokesman for Sutter Health, said the network will ultimately benefit employers.

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