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

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Twenty-four thousand General Motors workers in Michigan will beable to choose a cheaper health care plan that the company hasnegotiated directly with one of the state'slargest health systems.

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The company announced on Monday that it had inked a deal withthe Henry Ford Health System, ironically named for the founder ofGM's longtime rival.

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Related: Corporate America is cutting outinsurers

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Workers in seven counties where Henry Ford's facilities andphysicians are concentrated will be able to stick with theirexisting insurance policy or choose the new plan, ConnectedCare,which GM says will cost between $300 to $900 a year less inpremiums than the cheapest traditional plan offered by thecompany.

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GM is the latest of a number of large employers, includingWalmart, Boeing, Intel and Disney, to try to reduce health carecosts by going around insurers and instead negotiatingdeals directly with providers. According to Modern Healthcare, it's the first instance ofsuch an arrangement in Michigan.

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Such contracts typically have placed a great emphasis onincentivizing coordinated, cost-effective care, rather than thetraditional fee-for-service model. Providers are rewarded forhitting certain targets in terms of medical outcomes andutilization of services. That's the case in GM's contract withHenry Ford.

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

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On Tuesday, the National Business Group on Health released asurvey of 175 large employers about their future plans for employee health care. Elevenpercent said they planned to implement direct deals with providersin the next year.

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

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