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    Partners HealthCare shifting 100,000 employees, families to company-owned insurer

    Partners HealthCare, the state’s largest private employer, will shift health coverage for its 100,000 employees and their families to the company’s own insurance business, Neighborhood Health Plan.
    Lane Turner/Globe Staff/File
    Partners HealthCare, the state’s largest private employer, will shift health coverage for its 100,000 employees and their families to the company’s own insurance business, Neighborhood Health Plan.

    Partners HealthCare, the state’s largest private employer, plans to shift health coverage for all of its employees and their families to the company’s own insurance business, Neighborhood Health Plan, in a move aimed at containing costs.

    The company’s decision — which affects about 100,000 people — is a boon to Neighborhood Health Plan and a blow to Blue Cross Blue Shield of Massachusetts, which counted Partners as one of its biggest accounts and has administered Partners employee health benefits for more than two decades.

    The change is likely to rankle some Partners employees who may worry about losing access to certain care providers. Others may prefer the Blue Cross brand name to Neighborhood, which until recently focused primarily on poor and low-income patients in the state Medicaid program.


    Partners officials stressed that they are not changing the health benefits that employees receive, and that some out-of-pocket costs will actually decrease under the plan. Like many large employers, Partners designs the coverage plans for its employees and bears the financial risk for their medical needs.

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    Blue Cross acts as an administrator, processing claims and responding to questions and complaints about coverage. That role will shift to Neighborhood Health Plan on Jan. 1 — almost doubling the size of Neighborhood’s commercial membership — Partners told employees last week.

    Representatives of labor unions that represent thousands of Partners employees did not immediately object to the change. Partners is the parent company of a dozen hospitals, including Massachusetts General and Brigham and Women’s.

    “We’re evaluating the impact of this,” said Tim Foley, executive vice president of 1199SEIU United Healthcare Workers East. “It seems their goals and intentions are good: that people still have the same plans and coverage that they had before.”

    Joe Markman, a spokesman for the Massachusetts Nurses Association, said in an e-mail that the union will monitor the changes to make sure they meet the needs of nurses and the requirements spelled out in union contracts.


    Partners said it spends $830 million annually on employee health care costs. It expects to save $10 million to $15 million a year by moving employee coverage to Neighborhood Health Plan, said Rosemary R. Sheehan, Partners’ chief human resources officer.

    Some of the savings will be passed on to employees: copays for primary care are expected to drop from $15 to $10 per visit.

    Sheehan said that by managing health benefits in-house, Partners can launch new programs, such as navigators to help employees find care providers. The company also plans to expand programs to help employees reduce stress, manage high-risk pregnancies, and quit smoking.

    “There’s a number of different areas we’d like to invest in,” Sheehan said.

    Sheehan said that 98 percent of the doctors Partners employees currently see in the Blue Cross network are also included in the Neighborhood Health Plan network. “It does vary by geographic area,” she acknowledged.


    For Partners employees and their family members who seek care outside Massachusetts, the company plans to use Aetna’s national network.

    “Any change to health benefits at all creates anxiety,” Sheehan said. “The way we’re handling that is by really providing a lot of resources,” including an informational website for employees and town hall meetings.

    Blue Cross, which has 2.8 million members, said it was disappointed but not surprised by Partners’ decision. “Partners has been a valued customer for more than 20 years,” Blue Cross spokesman Greg Winter said in an e-mail. “Partners let us know a year ago that this was a possibility and we understand that they are in the process of trying to reposition NHP from a Medicaid plan to a commercial plan.”

    The shift reflects a vote of confidence in Neighborhood Health Plan, which Partners acquired in 2012. Neighborhood was predominantly a Medicaid health plan, but after struggling with severe financial losses, the insurer changed strategies. It began shrinking its Medicaid business and working more aggressively to sell insurance to small and large employers.

    Neighborhood’s finances have stabilized. It now insures about 32,000 people on Medicaid and has 109,000 commercial members.

    In a statement, Neighborhood’s chief executive, David Segal, said he’s “confident that Neighborhood’s proven capabilities, including our best-in-class customer service, will create a positive experience for Partners employees.”

    Health care market specialists said Partners’ decision to move employee benefits to Neighborhood Health Plan could help the insurer attract additional customers — further boosting its bottom line.

    “It certainly makes it easier for NHP to market themselves as having this kind of experience and this kind of capability. That would be a major advantage,” said Ruselle W. Robinson, a health care lawyer at Posternak Blankstein & Lund LLP.

    “The goal is to project to the world that NHP can be a good, high-quality commercial insurer,” said Dr. Paul Hattis, a professor at Tufts University School of Medicine.

    While trying to expand Neighborhood Health Plan’s footprint, Partners executives are also contemplating a takeover of a much larger insurer, Harvard Pilgrim Health Care. Partners and Harvard Pilgrim (whose chief executive suddenly resigned earlier this month) said their negotiations are continuing. Any deal they reach is likely to be scrutinized by regulators.

    Hattis said Partners may be making another attempt to grow its existing insurance business before trying to acquire an additional insurance company. “It does make one wonder that if they’re going to do this, will they want to sit back and see if it’s successful before they go through the challenging route of acquiring Harvard Pilgrim,” he said.

    Priyanka Dayal McCluskey can be reached at Follow her on Twitter @priyanka_dayal.