Walmart to give workers financial incentives to use higher-quality doctors

Reviewed by James Ives, M.Psych. (Editor)Oct 3 2019

Worried its employees aren't getting good enough care from doctors in their insurance networks, Walmart next year will test pointing workers in northwestern Arkansas, central Florida and the Dallas-Fort Worth area toward physicians it has found provide better service.

If the employees use these "featured providers," they will pay less out of pocket, Walmart officials said Thursday.

Walmart is working with Embold Health of Nashville, a recent startup company that uses data to analyze whether doctors provide "appropriate, effective and cost-efficient care." Embold CEO Daniel Stein was a Walmart executive from 2013 to 2017.

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

Walmart, the nation's largest private employer, would not disclose the percentage of its doctors in those geographic areas that have the new quality distinction or how much workers could save by using their services. The company hopes to take the program nationwide if successful, officials said.

About 60,000 employees and dependents in the three initial areas could be affected.

Ateev Mehrotra, associate professor of health care policy at Harvard Medical School, said Walmart's strategy could raise questions about whether doctors are chosen more for 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?" he said.

The effort to steer workers to certain doctors mirrors a similar approach Walmart uses with hospital care. Since 2012, Walmart has directed the 1 million employees and dependents on its health plan to better-performing hospitals for high-cost services, such as heart and transplant surgery.

While using these hospitals — including Mayo Clinic and Cleveland Clinic — may cost more than a local alternative, Walmart officials have said the strategy saves money by averting complications and unnecessary care. Several other large employers have followed a similar "centers of excellence" strategy.

Earlier this year, Walmart became the first large employer to direct its employees to diagnostic imaging facilities that it found provide more accurate care.

Employer health experts said Walmart's initiative with physicians is a groundbreaking step — but is also fraught with risks such as alienating doctors and upsetting employees who don't want to change doctors.

"It's a bold move to use the data they have and share it with employees for their benefit," said Steve Wojcik, vice president of public policy at the National Business Group on Health, a trade group of large employers. "It's part of Walmart's pattern to disrupt and transform health care for the better."

Stein of Embold Health said his company uses various quality metrics that vary by specialty to rate physicians. The company shares its criteria with physicians, he said, so they know what areas they need to improve to get the quality distinction. This includes such measures as rates of cesarean sections for patients with low-risk pregnancies and infection rates for patients after elective knee or hip replacement, according to Embold Health.

Mehrotra noted, however, that it's often difficult to identify which doctors provide the highest quality of care because most work in large groups where patients may see multiple physicians.

The initiative to identify better-performing doctors, he suggested, "can only be seen as a failure of their health plans," noting that employers typically rely on the insurance companies that administer their plans to identify the best doctors for their networks.

Walmart's test will include physicians specializing in primary care, cardiology, gastroenterology, endocrinology, obstetrics, oncology, orthopedics and pulmonology.

Walmart officials said the initiative is aimed at helping reduce the large amount of unnecessary care that doctors provide, which some studies say is as high as 30%.

"We hope to get a meaningful chunk of that removed from our costs and our associates' costs," said Adam Stavisky, Walmart's senior vice president of U.S. benefits. "How much we can save? We don't know, but we think it's material."

The initiative is one of several announced by Walmart officials Thursday, including pilot projects to expand access to telehealth doctors managing chronic care in Colorado, Minnesota and Wisconsin, and to help workers in North Carolina and South Carolina find doctors, provide assistance on billing questions or complex medical issues.