Employers recognized decades ago that they needed to change how they pay for healthcare to continue affording health benefits. The status quo of
Payment reform is no easy task, but it has resulted in positive changes such as bundled payments and healthcare warranties. Today, some healthcare purchasers use Medicare as a reference, moving away from discounts off billed charges — which tells us nothing about the actual cost of services. These are all steps in the right direction.
Today, we're seeing employers transcend payment reform with the help of
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The results are impressive. Of the employers that have successfully implemented this strategy, many have not seen a health benefit premium increase in years. Let me explain how they actually do it.
Data and network strategy
It all starts with employers understanding what is going on in their populations, then working with partners who can take a deeper look at their data to identify cost-saving opportunities for shoppable care. If joint problems are plaguing enrollees, where are the orthopedists with excellent outcomes that charge $20,000 less for a knee replacement? If clinician-administered medications or high-cost MRIs are taking significant money out of employees' paychecks, what are the safe and effective alternatives available at a lower cost?
Employers need to look beyond their own data. Last spring, I wrote an
In my experience, the data will almost certainly show that there is no single healthcare system that is the best at everything. If your state is not investing in a robust APCD that helps you and your employer clients understand cost and quality differences between service providers, then it's time to rally the employers in your state to advocate for change.
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Of course, employers need an administrator and network partner that enable them to steer enrollees to the highest-value care possible. Anti-tiering and anti-steering language in provider contracts is in opposition to changing the way we pay for care, so employers wanting to pursue this strategy must work with partners that embrace the philosophy of value-based payment reform.
Plan design and education
Successful employers also are retooling their plan designs. Switching from a low- to high-deductible plan may be painful but necessary to encourage enrollees to use the high-value care resources employers have identified.
Higher deductibles become less painful for employees when employers couple them with an offer to provide excellent, high-value care at little or no cost. This could include covering all preventive services, or even some procedures at 100%. Employers are better off paying 100% of a $16,500 joint replacement vs. 80% of a $72,000 joint replacement, and free care is a no-brainer for employees. High-value care makes employees happier, saves businesses money and drives more patients to high-value healthcare providers — a triple win.
Employers that do this today educate their employees about how choosing high-value care can put more money in their pockets. Some plans make contributions to employees' and retirees' health savings accounts, then educate enrollees on how to hold on to their money. The right messaging is important, as is the strategy to disseminate those messages. Successful employers are using a multi-pronged strategy to engage employees and their families, then putting resources in place to ensure they have the information when they need it.
High-value plan design is essentially payment reform between employers and employees. Employees that receive high-value care for free, or that costs the employer and employee significantly less, is a money-saving proposition. This can apply to labs, imaging, medications or any non-emergency, shoppable care. Employers are even paying employees' travel expenses when no high-value care options are located in their region.
Advanced primary care and care navigation
Onsite clinics are another common feature of value-based plan design because they can deliver some of the highest-value primary care possible. They also can help with care navigation if they are staffed by independent clinicians who are empowered with data to identify high-value care. Employers are opening onsite clinics to employees, family members and retirees, charging lower fees that cover the physician visit and sometimes labs and generic medications. Employers that are too small to open their own clinics are partnering with other employers to establish near-site clinics or contracting with direct primary care physicians to offer services part-time.
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Employers make the most of their onsite clinic when they take the time to intentionally build trust between employees and their clinicians. Successful onsite clinics are convenient, affordable and pass valuable information to employees who need support.
Employers can even go a step further by contracting with care navigation organizations to support employee decision-making when they have a health concern that requires care outside the clinic. This helps employees gain access to information when it is most relevant to them.
Role of health policy and competition
As mentioned previously, a value-based payment strategy requires the right partners who can help employers steer care to the right providers for the right reasons and who embrace data-based decision making. But it also requires a regulatory and competitive environment that allows employers to put free market principles to work. Lawmakers have a role to play here.
For example, a growing number of employers are using "white bagging" as a value-based approach to buying high-cost medications that must be administered by a clinician. This refers to the practice of securing these medications from lower-priced suppliers, bypassing hospital pharmacy markups, while ensuring the safe delivery of the medicines to the site of care. White bagging is saving millions of dollars for employers and consumers without compromising care. However, some hospitals across the country are attempting to preserve the profit margin on these drugs by pursuing legislation to ban white bagging.
Market consolidation is another trend that can benefit from thoughtful legislative or regulatory intervention. States should be conducting a thorough review of proposed mergers and acquisitions to protect competition in the market. Employers need to make their voices heard in state capitols to preserve their options and flexibilities to manage high healthcare costs.
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The ideas described here take time and effort, but employers tell me it's worth it. In fact, many employers believe it is their fiduciary responsibility to pursue value-based payment strategies.
Fiduciary responsibilities aside, imagine a market where all purchasers, even Medicare and Medicaid, are pursuing value-based payment strategies to move business to high-quality, lower-cost providers. How quickly would we see care improve in cost and quality across the board when incentives are aligned toward better care?
In our region, employers that have been successful in turning the ship on health benefit costs are freely sharing their ideas and strategies with other interested purchasers. They also are more involved today and aware of state policy discussions than ever before. These leaders are showing us the way – we just need to join in.
