By Jane Anderson

UnitedHealthcare is testing a new product in southern California using a closed network that relies on the company’s own OptumCare medical group. “Harmony” plans, which the insurer first rolled out in mid-2019, boast premiums that are significantly lower than other plans from UnitedHealth and from competing insurers.

“This is a ‘back to the future’ development,” says Jon Kingsdale, senior strategy adviser at Wakely Consulting. “With Optum’s acquisition of [medical] groups and customers’ increasing sensitivity to costs, United is re-inventing closed network products.”

A total of 35,000 people have signed up for Harmony in southern California, and UnitedHealth is paying agents sales bonuses of $100 for each member who enrolls, compared to $50 or $25 for most other plans, Bloomberg reports.

“I like the approach — a lot,” says Joe Paduda, principal of Health Strategy Associates, LLC. “The price differential should be compelling. One hopes it comes with much lower hassle factors as well in the form of streamlined benefits, copay and deductible management, formulary integration and integrated EHRs [electronic health records].”

In order for insurers to succeed, Paduda tells AIS Health, they need to demonstrate the ability to “deliver excellent outcomes at lower cost. The only way to do that is by owning or having very tight relationships with the clinicians and providers delivering care.” UnitedHealth’s Harmony effort, he adds, “is a promising step.”

But Kingsdale says United/Optum’s ultimate success in its Harmony venture will depend on whether the company can deliver comparable benefits at a far lower cost. “Is Optum really able to make these groups 20% more efficient?” he asks. “If so, it ought to be enough to move customers, but the real question is, can Optum’s delivery system sustain that 20% discount? Only time will tell.”

Chris Sloan, associate principal at Avalere, says that other insurers are moving in this direction. “It’s getting easier for the smaller groups and health systems to start their own health plans. I think we’re going to see a lot more health systems doing this,” he tells AIS Health.