The direct-contract option will cost GM employees between $300 to $900 a year less in premiums than the cheapest traditional plan offered by the company. (Photo: Shutterstock)

Twenty-four thousand General Motors workers in Michigan will be able to choose a cheaper health care plan that the company has negotiated directly with one of the state’s largest health systems.

The company announced on Monday that it had inked a deal with the Henry Ford Health System, ironically named for the founder of GM’s longtime rival.

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Workers in seven counties where Henry Ford’s facilities and physicians are concentrated will be able to stick with their existing insurance policy or choose the new plan, ConnectedCare, which GM says will cost between $300 to $900 a year less in premiums than the cheapest traditional plan offered by the company.

GM is the latest of a number of large employers, including Walmart, Boeing, Intel and Disney, to try to reduce health care costs by going around insurers and instead negotiating deals directly with providers. According to Modern Healthcare, it’s the first instance of such an arrangement in Michigan.

Such contracts typically have placed a great emphasis on incentivizing coordinated, cost-effective care, rather than the traditional fee-for-service model. Providers are rewarded for hitting certain targets in terms of medical outcomes and utilization of services. That’s the case in GM’s contract with Henry Ford.

“We believe we can do it,” Wright L. Lassiter III, Henry Ford’s CEO, tells the Wall Street Journal. “Is it a risk? Absolutely…You might deliver less of the stuff that would traditionally generate more revenue.”

On Tuesday, the National Business Group on Health released a survey of 175 large employers about their future plans for employee health care. Eleven percent said they planned to implement direct deals with providers in the next year.

While such deals will no doubt cut into insurers’ business, they don’t necessarily cut them out of the process entirely. Blue Cross Blue Shield of Michigan, for instance, will still be responsible for processing claims for GM’s new plan with Henry Ford.