Advice from a Purchaser Who Took on Health Care’s Status Quo and Won
April 14th, 2022
Read and re-read your contracts, and don’t agree to anything that will keep you from fulfilling your fiduciary responsibilities.
Dig into the data. Read the fine print. Follow the money.
That’s Marilyn Bartlett’s advice to employers and purchasers struggling to contain soaring health care costs and looking to gain greater transparency from plans, third-party administrators (TPAs), pharmacy benefit managers (PBMs) and brokers.
“You need to become aware of the full range of costs, including all the hidden fees and incentive arrangements used by health care providers, middlemen, service providers and vendors. You’re the fiduciary, so you have a responsibility to understand where the money goes.” -Marilyn Bartlett
Bartlett knows what she’s talking about when it comes to driving down health care costs. As a certified public account and the former administrator of Montana’s state employee health plan, Bartlett rescued the 31,000-member state plan from impending insolvency by carefully examining existing contracts and reviewing stakeholder financial data to drive better deals for the state.
Here, the contractual terms she found that were unnecessarily adding millions of dollars annually to the cost of health care, and the approach she recommends employers and purchasers take to carefully examine the contractual commitments they make with their vendors.
Use all available tools
According to Bartlett, new tools—notably hospital price transparency rules and the prescription drug reporting requirements for self-insured employers contained in the Consolidated Appropriations Act (CAA)—can give purchasers much better insight into how their health care dollars are spent. For instance, brokers will be required to disclose direct compensation paid by TPAs, PBMs and others. But it is important to push for disclosures on indirect, non-cash compensation, too. That information, combined with what brokers are required by law to disclose, can help employers determine exactly who the broker is working for.
The CAA also contains a prohibition on gag clauses that have traditionally restricted purchaser access to provider cost and quality information. This should help level the playing field when it comes to provider and plan negotiations.
Throw away the chargemaster
Bartlett took over Montana’s state health plan in 2015 in the wake of a $28 million loss the previous year. Actuaries were projecting the insurer would be insolvent by 2017. A former controller for a Blue Cross/Blue Shield plan and chief financial officer of a TPA, Bartlett drew from her experience to systematically disassemble and rebuild the plan’s provider and vendor arrangements.
Her first step was to review the wildly varying prices the plan paid to hospitals. One hospital, for instance, charged four times the amount of another for a knee replacement, and virtually all relied on discounts off their chargemaster, or internal price list, to set rates. Using this methodology, some facilities were charging as much as five times the Medicare rate for the same service.
As a result, the plan imposed a new, take-it-or-leave-it reference pricing model that tied all reimbursements to Medicare rates: Hospitals would receive, on average, about 230% of Medicare and the amounts could only increase if Medicare raised its baseline payments for the same service.
“We knew their financial condition and where their break-even points were” by reviewing Medicare cost reports, Bartlett said. “So, we were eventually able to get them to agree. We pulled rates down and got immediate savings.” Hospital cost savings reached $4.6 million in 2016, $12.7 million in 2017 and $15.6 million in 2018. Today, the plan routinely generates a surplus and premiums haven’t been increased since 2017.
The National Academy for State Health Policy recently launched its interactive Hospital Cost Tool, which provides data on a range of measures to offer insights on hospital profitability and breakeven points calculated using annual Medicare Cost Reports. This provides purchasers with an important tool to model the actions taken in Montana that significantly lowered costs.
Re-read the contracts
In addition to scrutinizing hospital pricing, Bartlett urges purchasers to dig deep into the health plan’s TPA, PBM and consulting contracts. She was appalled by what she found in Montana. Some of the more egregious contract language included clauses that:
- Gave the TPA authority to unilaterally pay non-covered services if they received pushback from a provider or patient.
- Allowed the TPA to keep prescription drug rebates as “reasonable compensation” for its services.
- Restricted the plan’s ability to perform its fiduciary duty by prohibiting it from seeking recovery of network provider overpayments.
- Prevented the plan from directly contacting any health care provider without involvement of the TPA.
- Imposed numerous constraints on how the purchaser could audit TPA claims data.
- Enabled the TPA to sell the purchaser’s data to outside parties.
- Allowed the TPA to pay affiliated third-party vendors without any purchaser knowledge or oversight.
- Allowed the TPA to pay providers less than the claim amount collected from the purchaser and pocket the difference.
- Routed drug manufacturer rebates through a third-party “rebate aggregator” that collected up to 25% of the rebate before sending the balance on to the health plan.
- Allowed PBMs to contract with pharmacies they own.
Lesson Learned
Read and re-read your contracts, and don’t agree to anything that will keep you from fulfilling your fiduciary responsibilities. Even if not explicitly banned by the CAA, hidden contract terms or contract terms that limit the availability of data place employers at risk for failing to meet their fiduciary responsibilities. This, in turn, can put them in both regulatory and legal jeopardy.
Bartlett said she believes the CAA disclosure requirements will go a long way toward helping purchasers—and the country—get control health care spending.
“All the money in the system; that comes from employers, employees, consumers and the taxpayer. It’s all of us, and it’s just horrible how much waste there is. So, I think these transparency rules can give us the leverage we need to finally start reducing that waste.” -Marilyn Bartlett
Today, Bartlett is helping state health plans pursue the same cost-saving tactics she employed in Montana in her role as a senior policy fellow with the National Academy of State Healthcare Policy.
What the End of the COVID-19 Public Health Emergency Will Mean for Employers
April 11th, 2022
The current COVID-19 public health emergency declaration has now been in place for more than two years – since January 2020. While a new wave could cause its extension, it will most likely end this summer.
Several policies that grant health care providers and payers extended authorities and flexibilities have been tied to the public health emergency, meaning these policies will go away when the public health emergency ends. But the health system has grown used to these extended authorities, and large employers need to be prepared for the potential impact of these policy shifts.
Several policies that will have a direct impact on large employers and other purchasers when the public health emergency ends are described below.
Telehealth Flexibility
Discretion on HIPAA enforcement: To increase access to telehealth and ease the burden on providers, telehealth can be delivered on non-HIPAA compliant platforms. This discretion on HIPAA enforcement will end with the public health emergency. Most employers have moved to HIPAA-compliant platforms as the pandemic has stretched on, but those who have not will need to ensure all telehealth vendors are HIPAA-compliant when the public health emergency ends.
Waiver of Medicare site-of-service and benefits rules: The waiver of Medicare site-of-service and benefits rules is also tied to the public health emergency. While this does not have a direct impact on employers, some follow Medicare rules on site-of-service and benefits. It is important for employers who do to be aware that the waiver will end with the public health emergency.
State licensure flexibilities: One of the challenges with telehealth is that physicians will have to be licensed in the same state as the patient receiving care. Some states have created significant new licensure flexibilities to improve access to telehealth providers, though not all states have tied those flexibilities to the public health emergency. To the extent employers are using telehealth providers who are in a different state from employees, they should investigate if their state licensure flexibilities will end with the public health emergency and adjust policies accordingly.
Pre-deductible coverage: The CARES Act of 2020 allowed for coverage of telehealth services pre-deductible in high-deductible health plans. Many employers have chosen to take advantage of this option because it provides better access to care for their employees. This provision, which does not fall under the public health emergency, expired in December 2021 but was just renewed effective April 1 and will end on December 31, 2022. While some policymakers have signaled their intent to make the provision permanent, the on-again, off-again nature of the expiration and renewal has created a sense of “whiplash” for employees and employers. Employers must decide whether they will re-enact this policy with its currently limited duration.
Medicaid
Enhanced federal match and continuous coverage: To reduce the rates of uninsured people during the pandemic, two Medicaid changes were put into effect – an enhanced federal match rate and a continuous coverage requirement. Both will go away when the public health emergency ends, and it is expected that more than 10 million people will lose Medicaid coverage. As people lose coverage, employers should be prepared for a possible increase in the number of people seeking employer-sponsored insurance.
Enhanced subsidies: Although not tied directly to the public health emergency, in response to COVID-19, enhanced subsidies were implemented in the individual market to help uninsured people get and stay covered during the COVID-19 pandemic. These subsidies expire on December 31, 2022. If the public health emergency and Medicaid provisions end in July, enhanced subsidies may enable people losing Medicaid coverage to purchase inexpensive coverage on Affordable Care Act health insurance exchanges. When the enhanced subsidies in the individual market expire, it is expected that there will be an increase in people joining employer-sponsored insurance coverage, in particular partners of employees already enrolled.
5 Federal Policies for Employers to Watch in 2022
January 28th, 2022
Federal policymakers, like the general public, are desperately searching for an end to the COVID-19 pandemic and a return to normality. However, with the country in its fifth wave of coronavirus cases and hospitals full to the point of breaking, the ongoing pandemic clouds and shapes the health policy landscape. Here are the five federal policy areas employers and purchasers should watch in 2022:
1. COVID Regulations and Legislation Affecting Employers
In 2020, Congress required health plans to cover the cost of COVID diagnostic testing when administered by a clinician, but the law did not set a maximum price for COVID testing, leading to sporadic price gouging. More recently, the Biden Administration finalized guidance requiring health plans to cover up to eight at-home tests per person per month. The guidance allows health plans to set a maximum reimbursement of $12 per test for tests bought over-the-counter if the plans also provide free tests to enrollees. Employers, health plans and vendors have acted quickly to implement the rule, but some employers have expressed concerns about implementation, price gouging and the overall cost to employers, which would exceed $4,000 for a family of four over 12 months. We are urging the administration will continue to revise the guidelines based on feedback from employers.
It has now been more than ten months since enactment of the American Rescue Plan Act – the last major COVID relief legislation. Congressional leaders have floated the possibility of another COVID relief bill. Specific provisions have not yet been identified, but it seems likely that it would provide economic relief to struggling businesses, including health care providers. PBGH has recommended that any further health care provider relief be tied to a moratorium or limits on mergers and acquisitions, which have historically increased costs without a corresponding increase in quality. Large employers and their employees have been forced to pick up the tab for an increasingly consolidated market.
2. A Renewed Push for Build Back Better – Including Prescription Drug Price Relief
President Biden’s nearly $2 trillion Build Back Better (BBB) proposal included provisions on drug pricing, but the effort was stymied by concerns from Sen. Joe Manchin (D-WV), who announced in late December 2021 that he would not vote for the bill as currently constructed. Senate Democratic leaders have left open the possibility of coming back to BBB later this year.
On Jan. 19, 2022, President Biden suggested in a press conference that the Senate would break the BBB bill into pieces, attempting to pass provisions that have support of all 50 Democratic Senators. The timing of this effort is unknown, but likely in the next several months.
Happily, for employers and purchasers, Sen. Manchin’s opposition to the bill is unrelated to the provisions on drug pricing. Not only has Sen. Manchin expressed continued support for meaningful drug pricing reform, but he has also suggested he would prefer the provisions be strengthened to encompass more high-cost drugs. The current legislation would allow Medicare to negotiate on the price of certain high-cost sole-source drugs after their patent and market exclusivity periods have expired. It would also impose strict inflation caps on all high-cost sole-source drugs. Importantly, those inflation caps would apply to all purchasers, not just Medicare. If enacted, this provision would save employers, other health care purchasers and consumers tens of billions of dollars over the next decade.
3. New focus on PBMs and Drug Supply Chain
Policymakers have been looking at opportunities to increase transparency and accountability of pharmacy benefit managers (PBMs) and others in the drug supply chain. The Trump Administration’s Transparency in Coverage rule, which is being implemented by the Biden administration, albeit on a somewhat delayed timeframe, includes significant new drug price transparency requirements of health plans and PBMs. Not surprisingly, the Pharmacy Care Management Association (which represents PBMs) has sued the administration to stop implementation of certain sections of the rule. If implemented, the rule would require PBMs to report on negotiated rates and historical net prices for covered prescription drugs.
Separately, the Consolidated Appropriations Act (CAA), enacted in December 2020, requires self-insured employers to report on drug costs. Specifically, the CAA requires them to report the 50 most frequently dispensed prescription drugs, the 50 most costly prescription drugs to the employer’s plan and the 50 drugs leading to the greatest increase in cost for the plan during the previous year. Further, they must submit information regarding the impact on premiums of rebates, fees and other renumeration to drug manufacturers. While the CAA’s new requirements don’t directly call out PBMs, ultimately PBMs will be required to provide the information employers need to meet their obligations under the law.
Lawmakers are now discussing whether to directly require PBMs to report on drug price information to federal authorities. Even more aggressively, some lawmakers are considering legislation that would extend fiduciary responsibilities to PBMs and other contractors of group health plans. This would go a long way to holding drug supply chain “middlemen” accountable for ensuring drug discounts are passed on to employers, other health care purchasers and consumers.
4. Addressing Market Consolidation and Anti-Competitive Practices
Health care system consolidation is not a new problem, but it has gained attention over the past several years, particularly in light of a slew of megamergers proposed during the COVID-19 pandemic. In an executive order signed in July 2021, President Biden directs the Department of Health and Human Services to move forward with the price transparency requirements noted above, and directs the Department of Justice and Federal Trade Commission (FTC) to review and revise guidelines for challenging future consolidation by health systems. New guidelines will make it more likely that the FTC will intervene to stop anti-competitive mergers among health systems, improving the competitive landscape and combating rising health care costs that land on employers and other large purchasers, as well as consumers.
Congress has also taken notice of the problem. Last fall, Sens. Mike Braun (R-IN) and Tammy Baldwin (D-WI) introduced legislation to ban anti-competitive contracting practices between hospitals and health plans. Their bill, the Healthy Competition for Better Care Act, would bar health plans from entering into contracts that include anti-competitive provisions, including “anti-tiering / anti-steering” and “all-or-nothing” requirements.
5. Post-COVID Telehealth Policy
Many policymakers and other stakeholders are actively considering overdue changes to telehealth policy. Responding to the closure of in-person settings early in the pandemic, Congress and the Administration reacted swiftly by waiving many telehealth restrictions, which are now beginning to expire.
Many bills have been introduced in Congress on telehealth over the last year, and there appears to be a growing consensus around addressing several key issues. Importantly for employers, lawmakers are considering options to allow telehealth services to be delivered across state lines. Currently, state licensing requirements limit the ability of clinicians to deliver telehealth to people outside of the state in which they are licensed. Revising licensing requirements could significantly increase the number of telehealth providers available to employees and their ability to shop around for the services they need.
Looking Toward the Horizon: Top 7 Health Care Trends for Employers in 2022
January 6th, 2022
At the recent PBGH year-end roundtable, noted health care futurist Ian Morrison discussed key health care trends that both he and PBGH believe will be most relevant to purchasers in the year ahead. Morrison is the author of several books on health care and has worked with more than 100 Fortune 500 companies in health care, manufacturing, information technology and financial services.
Here, the top 7 trends for large health care purchasers to watch as we head into 2022.
1. The workforce will remain in upheaval
Providers and other employers continue to grapple with the unfolding impact of the Great Resignation. Difficulty recruiting and retaining staff will remain an ongoing problem for many provider organizations. One consequence will be the continued ascendance of telehealth and other virtual care services. Separately, the loss of employer-based insurance for many workers who’ve left their jobs will likely increase self-pay, health exchange and Medicaid patients, resulting in a worsening payer mix and continued financial pressure on providers.
2. Providers depend on employers for profits
According to a recent RAND study, hospitals charge employers, on average, about 250% of Medicare rates. The premium over Medicare can range for 130% in Iowa to 300% in California. The reality is that providers are dependent on self-insured and commercial payers for their entire margin; purchasers that can’t or won’t consider shifting provider networks to compel some level of competition will continue to be subjected to the highest charges.
3. Choice has been conflated with quality
Employers are beginning to understand that in opting for broad, open provider networks over the years, they’ve undermined their own ability to direct employees and members to the highest-quality, most efficient provider organizations. This recognition is supported by surveys that show consumers themselves are willing to trade choice for quality.
That’s why, increasingly, large employers/purchasers are measuring and contracting with teams and individuals that meet their standards for quality and service and respond to their concerns, stepping away from one-size-fits-all arrangements with large health systems. PBGH members, for example, report quantified success through direct purchasing relationships with systems that are eager to innovate and demonstrate quality. Passively accepting health plan reports is a thing of the past as employers gain the experience and data needed to scale new approaches.
4. Consolidation will continue
Mergers and acquisitions across all levels of health care will continue as organizations negatively impacted by the pandemic are picked up by those interested in broadening their footprint or extending vertical integration. This trend will increase the market share of the most powerful health systems and reduce potentially more cost-effective alternatives for purchasers.
5. Investment in digital point solutions will keep growing
Venture capital investment in digital health solutions has doubled over the past several years to approximately $14.7 billion this year, and the trend is expected to continue. Fundamental questions remain about whether these solutions are truly adding value or simply increasing fragmentation and cost across the system. Employers are overwhelmed by the sales pitches they receive from new companies vying for their business and are looking for trusted sources that use clinical rigor and data-based outcomes to help them assess their value and create needed standards in the market for new entrants.
6. Addressing the health care inequities exposed by the pandemic will become a priority for providers and purchasers alike
The risks of hospitalization and death for marginalized people in the U.S. are two-to-three times higher than for white people. Organizations will continue looking for opportunities to close this gap by improving access and finding innovative ways to address social determinants of health. Such efforts can include innovative maternity care that reduces disparities and improves quality and outcomes and the broad adoption of patient-reported outcomes, which offer an ideal means for gaining insight into the care process and how its experienced by patients.
7. Employers have an historic opportunity to impose greater control over the health care supply chain
Because the pandemic has caused significant upheaval across the health care system and created financial stress for many provider organizations, purchasers have an unprecedented opening to leverage their buying power in pursuit of higher-quality, lower-cost care. However, they can have an impact only if they’re willing to act in concert. Alignment on priorities and implementation is critical to advancing the change we need. Purchasers must become more aggressive in designing benefits that favor high-value delivery partners.
Price Transparency Offers Opportunity to Employers and Purchasers
November 10th, 2021
What is hospital price transparency?
A landmark federal rule requires the nation’s 6,000 hospitals to make pricing data available publicly. This requirement includes plan-specific negotiated prices, not just the “chargemaster” prices, for every item or service.
The rule was supposed to help consumers and purchasers shop more intelligently for health care services. However, due to variable compliance and huge discrepancies in how the data is presented by reporting hospitals, it has been difficult to benchmark or compare data across hospitals.
Why haven’t hospitals complied?
Hospitals that have been slow to comply with the transparency rule have faced a penalty of only $300 per day. This is a very small financial hit to hospitals – large or small.
In early November, the administration finalized a rule to increase to the penalty that takes hospital size into account, raising penalties as high as $2 million a year for large hospitals that fail to make prices public. This increase in penalties will go into effect in January 2022.
What does this mean for employers?
Employers can use this information to drive value-based purchasing.
Employer Opportunities:
- As data becomes more complete over time, price information can be used to structure requirements in the procurement process and negotiate better contracts.
- Better price information will give employers and other health care purchasers more insight into how their contracted hospitals compare on price with other hospitals, both overall and on an item-specific basis.
- The availability of specific price information allows for better consumer decision support tools, more member engagement and better member education.
Health Plan Opportunities:
- Health plans will be able to use the data to negotiate better contracts with providers.
- Price data can also be used in conjunction with quality and patient safety ratings to design benefits that support the use of high-performing, lower-cost providers.
- Networks can be designed based on value, and variation that does exist will be easier to identify.
Bottom Line: Price transparency means health care purchasers have access to more information to determine value and improve affordability for their employees and members.
U.S. Employers Sacrificing Competitiveness in the Global Economy
September 7th, 2021
Health care as an industry has become big business at the expense of employers and employees. With 60% of Americans getting their health care coverage through their jobs, large and small employers alike are justifiably concerned about rising costs of care.
The current health care delivery system is long overdue for change. No meaningful transformation can occur without a collective employer voice. Until now, the majority of CEOs and CFOs have remained a silent majority. The time to speak up is now – we are sacrificing our competitiveness in the global economy by paying so much more than needed for health care and health system sustainability.
The proof is in the numbers.
The ongoing RAND Hospital Pricing Transparency Study continues to show that employers routinely pay two-to-five times more than what is needed for health care and prescription drugs. RAND also confirms there is little correlation to the quality of care received and prices paid for those services.
Quality not only includes providing the best evidence-based care, but also avoiding unnecessary tests, procedures and surgeries. A recent report on hospital waste and overuse on more than 3,100 U.S. hospitals from the Lown Institute, a nonpartisan health care think tank, found that in Houston alone several hospitals ranked in the bottom 50. The National Academy for State Health Policy shows a widening gap between what employers pay and what is needed for hospital mission sustainability.
The old argument from hospitals is employers must be charged excessively because of inadequate reimbursement from other payors. The truth is most U.S. hospitals make a profit from Medicare and/or Medicaid. Additionally, the rise in premiums paid by employers and their employees is not due to utilization but to inflated prices, and that added revenue is going more towards administrative costs and facility fees, not to physicians and better health care.
Why should I care?
High health care costs are a drain on job and wage growth and business development, all of which impedes the ability of American companies to compete globally.
Most CEOs consider employees to be their greatest asset, yet employee quality of life is slowly eroding. Funds previously earmarked for salary raises are now being used to support rising employer premiums, resulting in greater costs to employees. Additionally, high deductible health plans force many employees to forego needed medical care resulting in even higher costs for delayed care. Recent studies show a laundry list of issues for employees due to unaffordable health care, including saving for children’s education and a looming retirement crisis.
As a benefits director for a large company recently shared, “Our business and our employees are being crippled by health care.” This current system penalizes employees with smaller paychecks and higher burdens. Where’s the value in that?
In response, C-suite leaders are beginning to react to evidence of egregious employer price discrimination such as that identified in California by the recent Sutter Health litigation. Increasingly, they’re unable to look away from the direct relationship between anti-competitive business practices of the health care industry and rising costs that threaten their business and their employees’ financial and physical well-being. Perhaps that’s why a recent survey of executives at 300 of the country’s largest companies found that nearly 90% of believe the cost of providing health benefits will be unsustainable within five-to-10 years, and that one viable option for saving the system is some kind of new intervention by the federal government.
What can I do about it?
Few CEOs would knowingly pay such inflated prices for any other element of their business supply chain, yet they continue to foot an exorbitant bill for health care, which is no different than any other service or product they purchase for their business.
It is time for C-suite leaders to take action on behalf of their business, their employees, their city and their country. It’s time to step up and demand change and accountability, which can only come from a collective C-suite voice.
Known solutions exists. We must eliminate the inefficient and wasteful system focused on disease that prioritizes tests and procedures. It needs to be replaced with a focus on advanced primary care with referral to specialists based on value that also emphasizes the importance of mental health services. We must reduce the outrageously high prices Americans pay for drugs compared to the rest of the world and reduce the price discrimination faced by those with private health insurance paying roughly 300% what Medicare pays for the same services.
Some health care industry players have benefited greatly from the status quo at the expense of employers and are openly resistant to change. The tools, data and information needed to demand a value-based health care system are now available to employers and their intermediaries. Those best positioned to drive this needed transformation are employers, but it will not happen without C-suite engagement and resolve.
Employers Continue to Lead through the COVID-19 Pandemic
September 2nd, 2021
Throughout the COVID-19 pandemic, employers have stepped up to lead, taking the actions necessary to protect their employees and their businesses. And the recent trend of vaccine mandates and incentives is just the latest example of that.
A plurality of PBGH’s nearly 40 members of large private employers and public health care purchasers have already mandated COVID-19 vaccinations for their employees. One of the first was Walmart, with The Walt Disney Company and others following soon behind.
With full FDA approval of one COVID-19 vaccine, more employers will likely adopt mandates, incentives and penalties to encourage their employees to become vaccinated, particularly since other mitigation measures — ongoing testing, wearing masks, limited employees onsite – would likely be needed for years to come. The administrative burden of these approaches is expensive and disruptive.
Still, Delta Airlines recently announced that unvaccinated employees will face a health insurance surcharge of $200 per month, bringing fresh questions about additional steps employers are likely to take to encourage employees to get vaccinated.
“It’s very much like smoking surcharges, and it is not unreasonable,” Elizabeth Mitchell, PBGH CEO told Yahoo Finance. “People can choose to smoke. They can choose to be unvaccinated. But that comes with additional costs for health care, and companies are paying those costs. Families are paying those costs because they hit everybody’s premiums. So, it is not unreasonable to expect those who are incurring greater costs to actually contribute more.”
Keeping the Workforce Safe
Having employees vaccinated is in the best interest of the workforce. Employers offer health benefits to keep their workforce healthy and to attract and retain talent, and people want to know that they are working in a company where they will be safe.
We also cannot overlook the cost of what are avoidable illnesses and the massive economic crisis this presents to employers and American workers alike. The average hospitalization cost for COVID-19 for a privately insured patient is over $30,000. In June and July alone, COVID-19 hospitalizations among unvaccinated adults cost the U.S. health system roughly $2.3 billion. Large employers who are self-insured are paying those bills – and ultimately, so are American workers — who will see those costs reflected in their health insurance premiums. Those added costs also come out of wages and job growth, which ultimately hurts employees and their families.
The expectation that employees will be vaccinated before showing up for work, is shared by businesses and the American public alike. A recent USA Today and Ipsos poll reported 62% of participants support employers requiring workers to be vaccinated.
Practical Steps to Encourage Employees to Get Vaccinated
Beyond mandates and surcharges, there are practical policies employers can put in place to encourage employee vaccination rates. In a new report based on the insights from qualitative research, The Commonwealth Fund offers recommendations for employers contemplating COVID-19 vaccination requirements for their employees:
- Provide honest, transparent and consistent messages.
- Connect science to the workplace policy.
- Demonstrate understanding that employees may feel unwell after receiving vaccinations and ensure policies support paid sick leave.
- Make vaccination easy with vaccination pop-up clinics at the worksite or by providing employees with a list of local pharmacies offering vaccinations.
- Consider and prepare for exemptions.
Click here for more information about these recommendations and how to apply them.
The human toll of COVID-19 on families has been enormous and employers understand they are in a position to lead and to make a meaningful difference for the health of their employees, communities and country.
We’ve seen PBGH members along with other businesses engage in a public-private partnership in which companies have joined state and federal governments in efforts to get more Americans vaccinated and to keep their communities safe. That’s what is required to put this pandemic behind us and get our economy and country back on track.
4 Ways Employers Can Boost Vaccine Acceptance and Uptake
March 23rd, 2021
Employers have a critical role to play in helping end the COVID-19 pandemic by encouraging vaccine acceptance and uptake among their employees, including those most vulnerable to COVID-19, experts explained in a recent Purchaser Business Group on Health webinar.
“Your leadership really matters,” said Deb Friesen, MD, a physician advisor with Kaiser Permanente Clinical Solutions. “One of the things we’ve found is that your employees consider you the most trusted source of information related to the coronavirus, more credible than even government health organizations or the media. So, your role here is crucial.”
Friesen was joined in the March 17 webinar by Stephen Massey, managing director of the Health Action Alliance, a group formed to support employers in strengthening vaccine acceptance, advancing health equity and rebuilding public health.
“Even before all adults are eligible for vaccines, it’s important that companies begin preparing their workforce by sharing trusted information and making plans to reduce barriers to vaccination,” Massey said.
4 Steps Employers Can Take to Increase Employee Vaccinations
Friesen and Massey highlighted four steps employers can take to accelerate vaccine acceptance and uptake:
1) Spread a message of confidence and encouragement around vaccine safety and efficacy. It’s not so much that people are hesitant about vaccination; they simply need access to more trusted information about vaccines. Messages that encourage vaccination should focus on the importance of creating a safe environment for family, friends and co-workers, and emphasize that vaccines can help us all get back to doing things we love with the people we love.
Friesen also provided nuance about the vaccines that is valuable for people to understand and important for employers to include in their messaging: that when a vaccine is reported to have an efficacy rate of 95%, as with the Pfizer and Moderna vaccines, it means their chances of getting infected are decreased by 95% — not that those inoculated have a 5% chance of getting the disease. The studies on available COVID vaccines are demonstrating that each is incredibly effective, particularly when weighed against the annual flu shot, which in its best years is 40% to 60% effective at preventing disease. Significantly, each of the COVID vaccines currently available in the U.S. are 100% effective at preventing severe disease and the need for hospitalization.
2) Collaborate with community public health and health care partners to proactively engage workforce populations that may have unique concerns or questions, or who may need extra support accessing vaccines. Disproportionately lower numbers of Black and Hispanic Americans are receiving vaccines, despite their higher risk of infection, hospitalization and death from COVID-19. It is essential that employers develop targeted communications and policies to build trust and boost vaccine access among these populations. Engaging trusted messengers, including employee resource groups and other affinity networks, should be central to your strategy.
3) Make it easier to get vaccinated. Provide accommodations for vaccine appointments whenever possible for both full-time and part-time employees, contract workers and other personnel. Offer paid time-off and transportation to and from vaccination sites and childcare for employees who might otherwise be unable to schedule vaccine appointments. And as vaccine supply increases, consider engaging your local public health department and offering to host an on-site vaccine clinic at your place of business.
4) Take advantage of available resources. The Health Action Alliance has developed a wide range of free tools for improving vaccine acceptance and strengthening equity, including a sample communications plan, messaging for at-risk groups, peer-to-peer training and dialog and guidance for educating and engaging employees. Visit the organization’s website to learn more.
“At the end of the day, the most important thing any company can do right now is to share trusted information about the safety and efficacy of vaccines and make it as easy as possible for employees and workers to get vaccinated when it’s their turn,” Massey said. “By taking action to strengthen and accelerate the vaccine rollout, businesses can help turn the tide against COVID-19 and create a stronger, healthier future for everyone in America.”
2021 Health Policy Priorities: Bipartisanship the Only Path to Success
January 19th, 2021
Beginning on Jan. 20, Democrats will hold a “trifecta” – control of the White House, Senate and House of Representatives – for the first time since Barack Obama’s first term in 2009.
Democrats have signaled that they intend to pass major health care legislation this year. While health care legislation has been the flashpoint of major partisan battles in recent years – most notably the passage of the Affordable Care Act in 2010 and its attempted repeal in 2017 – there is a real window for bipartisan support on legislation focused on reducing health care costs and improving quality. Over the past decade, the rate of inflation for medical services has averaged nearly 3% annually – roughly twice the rate of inflation for all other products and services. Unsurprisingly, recent public polling demonstrates that lowering the cost of care for individuals is the most popular health policy among voters. As the largest purchasers of health care, large employers know well the impact of the relentless increase in health care costs on their businesses and on their employees.
Post-COVID 2021 Policy Priorities for Large Employers
Like policymakers, employers are focused right now on stemming and ultimately defeating COVID-19. Once the pandemic is largely over, they will look to policymakers to pivot quickly to directly tackle high health care costs, inadequate quality and stubborn inequity in health care. But that does not mean it will be easy. Truly addressing the underlying problems in our health care system means directly challenging entrenched interests that perpetuate the broken status quo. That’s why taking on these issues can and should be bipartisan in nature.
Large private employers and public health care purchasers will be watching the actions of the Biden administration and new Congress with special focus on the following issues:
1. Broken Health Care Markets
Our health care system is rife with economic distortions, including inadequate competition, opaque pricing, uninformed consumers and a lack of actionable measures of quality. Large employers are interested in the changes policymakers will make to strengthen competition and transparency. Where markets have failed entirely or where there is no market, federal policymakers have a responsibility to directly manage prices, with an emphasis on strengthening competition via:
- Stronger health care anti-trust enforcement, including prohibitions on anti-competitive practices, to address the problems of industry consolidation, market power and high prices.
- Price transparency at the individual, health plan and provider levels, including unveiling negotiated prices between providers and health plans.
- Policies to increase healthy price competition among brand name drugs, generics and biosimilars
In highly consolidated health care markets, where dominant health systems have already driven up prices, it may be impossible to reinstate healthy competition. This may be particularly true in rural areas with very limited numbers of hospitals and physicians. In such cases, the federal government should directly set or constrain prices for all purchasers at fair and reasonable levels.
For pharmaceuticals with no effective competition (including many brand-name drugs under patent and/or market competition) the federal government should negotiate fair and reasonable prices available to all payers, as well as institute caps on inflation for prescription drugs currently on the market.
2. Rapid Acceleration of Payment Reforms from Fee-For-Service to Value-Based Models
Policymakers have long recognized that the fee-for-service payment system promotes higher volumes of care without accountability for the quality of care or patient experience. It is time for leaders to insist on the rapid adoption of value-based payment models for both public and private payers.
Population-based payment models, as described in the Health Care Payment Learning and Action Network’s framework, are the best way to provide flexibility to physicians and health systems while ensuring accountability for the total cost of care. The payment models must also include accountability for quality, patient experience and equity.
In the wake of the pandemic and the rapid rise of and need for remote care options, it is important to note that population-based payment models provide the right incentives for the expanded and appropriate use of telehealth services.
3. Adoption of Robust Performance Measurement with Focus on Health Equity
The ability of our health care system to deliver higher quality outcomes depends on the adoption of standardized and mandatory performance measures. Such measures are essential to the widespread adoption of value-based payments.
Performance measures should include clinical outcomes, patient-reported outcomes, appropriateness and equity. And they should be standardized and required for all physicians, hospitals and other clinicians to provide useful comparable information to patients, consumers and purchasers.
For too long, however, health care quality measures have failed to address underlying racial, ethnic and other disparities in health care. Performance measures should include the capture of racial and ethnic identification data. Further, quality improvement initiatives should focus on areas of greatest disparities, such as maternal and infant care and COVID.
Each of the policies described has enjoyed bipartisan support in the past. With just 50 Senators caucusing with Democrats and a five-seat majority in the House, the most viable path toward legislative success rests on bipartisanship.
For more on what large employers are prioritizing in 2021, read 7 Large Employer Health Care Priorities to Watch in 2021.
5 Health Care Provisions in the COVID Relief Bill Impacting Employers and Families
December 21st, 2020
Over the weekend, congressional negotiators reached a deal on a more than $900 billion COVID-19 relief package. This legislation will be tied to a year-end government funding bill. Among the many provisions in the bill are several of particular interest for employers and health care purchasers.
Below is a summary of the critical items of interest:
1. Surprise Medical Bills
After a two-year legislative fight, Congress is poised to finally pass legislation to ban surprise medical bills.
Consumer protections: If a covered individual receives out-of-network care without their consent (whether in an emergency or non-emergency situation), the individual will only be expected to pay their normal in-network cost sharing amount.
Negotiation between providers, insurers: The remaining balance of the bill will be negotiated between the health insurer and the provider. The two parties will have 30 days to negotiate a mutually agreeable payment rate. If they fail to reach agreement after 30 days, either party may request an independent dispute resolution process (IDR). Under IDR:
- Both parties will submit a “best final offer” to an independent arbitrator.
- Both parties may submit additional information justifying their offer, but the arbitrator is banned from considering providers’ billed charges and the payment rate from public payers, including Medicare. Further, the arbitrator must consider the median in-network payment rate for the service in the geographic area.
- Using “baseball style” arbitration, the arbitrator must choose one of the two offers.
- The arbitrator’s decision is final. The losing party is responsible for payment of the IDR cost.
Most care settings affected: The surprise medical bill protections apply to inpatient hospitals settings and outpatient care in emergency departments, outpatient clinics and surgical centers and clinician offices. They also apply to air ambulance transport. Unfortunately, they do not apply to ground ambulance transport services.
2022 implementation: Protections against surprise bills will take effect for health plan years beginning on or after January 1, 2022.
Impact: The consumer protections included in the legislation will put an end to the scourge of surprise medical bills and reduce the ability of certain providers from driving up costs by implicitly threatening to bill patients if they are not included in insurance networks. However, there is concern that the IDR process may be “gamed” by providers and will be less successful at holding down costs for purchasers than the proposed alternative of a benchmark payment rate for surprise bills. Nevertheless, the Congressional Budget Office and other independent analysts believe that the legislation’s requirement that the arbitrator consider the median in-network payment amount will be effective at holding down costs.
2. Health Care Price Transparency
No more gag clauses: The final bill will ban “gag clauses” from health plan/provider contracts. These clauses prohibit plans from disclosing to plan sponsors and individuals’ financial information including the allowed amount and provider-specific negotiated payment amounts for items and services covered by the health plan.
Drug spending disclosures: The bill also requires annual disclosure by health plans regarding spending on prescription drugs, including the most frequently dispensed drugs, the highest cost drugs, the drugs with the fastest rising spending and the effect of drug rebates, fees and other renumeration plan premiums.
Impact: The ban on gag clauses in provider/plan contracts will provide meaningful, provider-specific information to plan sponsors and individuals regarding prices. However, Congress chose not to include accompanying legislation that would give plan sponsors the tools they need to use this information to stop dominant health care systems from engaging in anti-competitive behavior. This will, unfortunately, allow health systems to continue to drive up costs for purchasers and consumers without improving quality.
In addition, Congress chose not to include meaningful reform to the way in which health plans and pharmacy benefit managers (PBMs) purchase drugs. Previously considered legislation would have provided drug-specific price disclosures, discounts and rebates, and banned PBMs from engaging in “spread pricing,” in which the PBMs directly profit from rebates and discounts they negotiate rather than passing them onto plan sponsors. Instead, the final language in the bill provides only high-level aggregated information without a ban on spread pricing. It is unlikely the legislation will result in any change in behavior by PBMs and health plans.
3. Direct Economic Relief
Stimulus payments: Up to $600 per person in direct stimulus payments to individuals, phasing out for families with income exceeding $75,000.
Increased financial support: Enhanced unemployment insurance benefits of $300 per week for up to 11 weeks.
Help for small business: $240 billion for Paycheck Protection Program loans for small businesses, including non-profit organizations. Qualifying PPP recipients will need to demonstrate significant revenue losses in 2020.
Impact: The enhanced unemployment insurance and extension of the paycheck protection program will help struggling families and keep the economy afloat during the pandemic. However, Congress did NOT include COBRA subsidies for employees who have been laid off or furloughed – many of whom have joined the ranks of the uninsured since the pandemic began. These subsidies would have provided important financial support and medical continuity for families affected by job loss.
4. COVID Response
The bill provides additional fund for vaccines and COVID testing practices intended to help get the pandemic’s spread under control.
Vaccines: $20 billion for purchase of vaccine doses by the federal government; $8 billion for vaccine distribution
Testing: $20 billion for states to conduct testing and contact tracing
Provider relief: $20 billion in additional economic relief for health care providers.
Impact: The COVID response funding made available under this bill is critical to helping the country exit the pandemic as swiftly and effectively as possible – the necessary step to reinvigorating the economy.
5. Flexible Spending Account Rollover
The legislation allows flexibility for taxpayers to rollover unused amounts in their health and dependent care flexible spending arrangements (FSAs) from 2020 to 2021 and from 2021 to 2022. It also permits employers to allow employees to make a 2021 mid-year change in contribution amounts.
Impact: This provision gives employers and employees flexibility in managing unexpected changes in health care costs during the pandemic.