PBGH Launches its Advanced Primary Care-Driven Health Care Network in Puget Sound, Washington
December 10th, 2024
Boeing, eBay and Other Large Employers Now Offering Advanced Primary Care and High-Value Specialist Referrals to Employees and Families
Purchaser Business Group on Health (PBGH), a nonprofit coalition representing 40 private employers and public entities across the U.S., today announced that the Puget Sound region of Washington is the first to offer PBGH’s Advanced Primary Care-driven health care network to eligible member employees and families. The network is a ‘system of excellence’ driven by the rigorous quality and patient care standards of PBGH’s Advanced Primary Care (APC) program and includes high-value specialty referrals to deliver comprehensive, whole person care.
Multiple PBGH employers are participating, including The Boeing Company and eBay whose combined tens of thousands of eligible employees can now access this innovative network of advanced primary care and high-quality specialists through their employer-sponsored health benefits.
“PBGH has a 35-year history of supporting employers to get the best care for their employees. We know that primary care lowers health care costs by as much as 33%, while significantly improving the health and well-being of those who regularly see a primary care provider,” said PBGH President and CEO Elizabeth Mitchell. “We are proud to partner with Boeing, eBay and other PBGH member organizations committed to better access and health outcomes at lower costs to patients. PBGH members are pleased to partner with top-quality primary care providers across the Puget Sound area to improve the health and wellbeing of their workforce.”
“PBGH identifies top providers who meet quality standards based off of clinical best practices, purchaser expectations of patient experience, and administrative transparency to achieve the PBGH Care Excellence designation,” said Raymond Tsai, M.D., MS, a Family Medicine physician serving as PBGH’s Vice President of Advanced Primary Care.
EmsanaCare, a company co-founded by PBGH, directly contracts with those providers and enables care navigation among them. Eligible employees and families gain access to a vetted network of high-quality primary care and specialty providers, and navigation services for referrals.
“By directly contracting with top primary care and specialty providers, thousands of employees and their dependents can access primary care that meets PBGH’s quality standards. By ensuring seamless navigation between primary care and top specialists , we make getting to the best care easy. Employees have improved access, satisfaction, and outcomes,” said Dane Guarino, CEO of EmsanaCare. “At the same time, employers enjoy simplified plan implementation and peace of mind that they are creating a pathway to improved health that is easier for their employees to use.”
“Our purpose is rooted in connecting people and building communities to create economic opportunity for all,” explained Rob Paczkowski, Senior Director, Global Benefits, eBay Inc. “Providing comprehensive and innovative benefits that support the health and wellbeing of our teams is vital to nurturing a culture that enables us to achieve our purpose. PBGH simplifies some of the most challenging aspects of selecting and contracting with high quality health care providers. By partnering with other employers through PBGH it makes it possible for us – in areas like Puget Sound where we have a smaller employee headcount – to provide our local teams and families with health care the way it should be delivered.”
The Puget Sound region of Washington is the first of many markets nationwide. There is currently another open request for proposal for APC providers who want to work with employers in the San Antonio, Texas market, with additional markets being planned for 2025.
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About Purchaser Business Group on Health
PBGH is a nonprofit coalition representing nearly 40 private employers and public entities across the U.S. that collectively spend $350 billion annually purchasing healthcare services for more than 21 million Americans and their families. In partnership with its members, PBGH initiatives are designed to test innovative operational programs and scale successful approaches that lower healthcare costs and increase quality across the U.S. The PBGH System of Excellence streamlines the selection, contracting, and administration of high-quality advanced primary care, ensuring equitable and evidence-based care while flattening trend.
About EmsanaCare
EmsanaCare, co-founded by the Purchaser Business Group on Health, simplifies the adoption of advanced primary care (APC) for employers and purchasers. The solution focuses on streamlined contracting, comprehensive administrative support, and informed referrals, allowing purchasers to access multiple APC sites with a single contract. By connecting advanced primary care practices with high-value specialists and regional centers of excellence, EmsanaCare is dedicated to delivering value-driven, efficient, and high-quality primary care solutions for employers and their members.
Increasing Access to Supportive Cancer Care for Workers, Families, and Caregivers
December 2nd, 2024
Cancer affects nearly 1 in 2 individuals in their lifetime, with 41% of Americans developing cancer in their lifetime and many more becoming primary caregivers to a loved one with cancer. Aside from the devastating personal impact of a cancer diagnosis, cancer negatively affects the workplace as well:
- 45% of people diagnosed with cancer in the U.S. are of working age (between the ages of 20 and 64).
- 42% of cancer patients report their condition reducing their productivity or interfering with physical and mental tasks at work.
- 63% of cancer patients report making changes in their jobs or career, such as taking extended time off, working part-time, or declining a promotion.
- Only 54% of working-age cancer survivors are employed full-time.
The impact of diminished productivity and lost work time for employees with cancer and their caregivers are so significant that Johns Hopkins estimates these indirect costs ($139 billion) exceed the direct medical costs of cancer itself nationwide ($125 billion) annually.
With cancer consistently ranking as a top cost concern for organizations, purchasers are seeking better cancer solutions that ensure consistent access to high quality holistic cancer care for their employees.
Supportive Cancer Care Improves Patient Care, Lowers Costs
Cancer care that is “supportive” is evidence-based and focused on meeting the whole-person needs of patients and caregivers pertaining to cancer. Supportive care meets the clinical, physical, emotional, social, and spiritual needs of patients and caregivers, with consideration for their economic and environmental circumstances. It includes a variety of support services beyond the usual, clinically-oriented approach to cancer treatment.
Purchasers that invest in providing their employees early access to supportive care following a cancer diagnosis can expect:
- Improved patient quality of life and caregiver experience
- Reduced cancer treatment side effects
- Improved medical outcomes
- Greater workforce retention and attendance (among cancer patients / caregivers)
- Decreased costs associated with cancer treatment (due to shorter hospital stays, fewer readmissions, and lowered medical costs)
Purchasers have an opportunity to tackle their high cancer costs while providing a better care experience for employees and dependents over the usual model of cancer treatment. To learn more about the business case for purchasers increasing access to supportive cancer care for workers, families, and caregivers, read our latest issue brief.
Changing the Game: Groundbreaking Drug Benefit Purchasing Standards for Large Employers
October 13th, 2023
Between mounting legislative efforts, new purchaser tools and an increasingly untenable status quo, the pharmacy benefit manager (PBM) industry today faces an historic and long-overdue reckoning. Yet genuine PBM reform is not guaranteed and can only occur if large employers and other health care purchasers are unrelenting in their push for change.
For decades, pharmacy benefit managers have leveraged their middleman role in the drug supply chain to maximize profits at the expense of prescription drug affordability, leaving U.S. patients and employers to pay 2.5 times as much for life-saving medications as those in other high-income nations. Unchecked PBM profiteering has contributed to rising medication costs, threatened the sustainability of employer-sponsored health insurance and, in some instances, jeopardized patient health.
How to Address the Problem
Over the past 40 years, U.S. drug costs have climbed more than ten-fold, from $30 billion in 1980 to $348 billion in 2020. While pharmaceutical manufacturers are frequently blamed for rising costs, an undeniable link exists between price increases and the ever-expanding supply-chain dominance of PBMs. PBGH’s PBM initiatives and policy reform efforts are designed to help employers rein in out-of-control pharmaceutical spending.
PBMs employ a multitude of strategies to leverage their intermediary role in pursuit of outsized profits. Because these activities occur behind a veil of secrecy and ambiguity, most stakeholders have remained largely uninformed and uncertain about whether and how to challenge the status quo.
But that hesitancy is changing now, thanks to a growing public understanding of abusive business practices and concurrent efforts to compel accountability and reform. Rare political consensus at both the federal and state levels is driving legislative initiatives that impose key structural changes on the PBM industry. In the marketplace, new transparency rules, along with the fiduciary obligations for large employers offering employee health benefits, are triggering unprecedented scrutiny of PBM costs, fees and client representations.
Success in rolling back PBM abuses ultimately will depend on emerging legislative reforms led by employers and purchasers, in partnership with consumer groups, and a critical mass of employers using their market power to force fundamental change across the industry. This requires increased awareness from benefit departments and their senior leadership of the problems PBMs create, as well as practical, iterative steps to resolve them. Both objectives are priorities for PBGH members.
Setting the Standard
PBGH’s latest effort – the PBM Purchasing Standards – builds on a long history of combatting rising pharmaceutical costs and helps employers and other health care purchasers combat abusive PBM contracting practices.
The standards were developed by PBGH’s Pharmacy PBM Workgroup, which includes representatives from member companies, as well as ERISA attorneys, pharmacy industry specialists and PBGH expert staff. The document’s sample provisions offer a starting point for organizations seeking to establish a solid contractual footing in their PBM relationships.
The PBGH PBM Purchasing Standards offers guidance for leveraging these mandates in preliminary discussions with PBMs and pharmacy advisors. Recommendations include insisting on access to all direct and indirect compensation paid to benefit consultants and/or brokers by PBMs, as well as details about the purchaser’s pharmacy spend, historical drug costs and the financial impact of rebates on plan premiums.
Four categories of purchasing standards further inform the guidelines and underpin model provisions that can help plan sponsors meet their fiduciary obligations. The four standards include:
- Transparency that supports a clear understanding of drug cost, drug utilization and revenues paid by the plan to the PBM.
- Clarity of definitions that cannot be manipulated to mislead plan sponsors and allow PBM profiteering.
- Customization that allows plan sponsors to provide an excellent benefit that optimizes clinical outcomes and cost-effectiveness.
- Client- and member-centric customer and account management that prioritizes member clinical outcomes, financial well-being and member satisfaction and that supports plan sponsors with trustworthy strategic guidance.
Sample contract language in support of each standard and tied to the transparency standard address two of PBMs’ primary avenues for profiteering: rebate retention and spread pricing.
All told, the guidelines include more than 140 model provisions or sub-provisions that contain specificity on everything from PBM reporting requirements and drug definitions to prior authorization, pharmacy network creation, formulary development and audit rights. The document also includes detailed definitions of multiple terms commonly used in PBM contracts.
Read more about the PBGH PBM Purchasing Standards and the organization’s history of fighting against outrageous drug costs.
PBGH recommends that plan sponsors interested in using the guidelines share the document with a specialized PBM ERISA attorney or expert pharmacy consultant. All advisors should review the document and attest to their alignment with both the spirit and letter of the guidelines.
Employees Ready for Action to Address High Health Care Costs
August 29th, 2023
For years, employees have faced increasing premiums and cost-sharing. But how well do they understand the sources of those increases, and how ready are they for employers or policymakers to take action?
Recent focus group research conducted by Public Agenda, a nonpartisan research-to-action organization, with people covered by employer-sponsored insurance, found that participants were unaware of the extent to which provider prices are driving the affordability crisis. But when focus group participants were presented with straightforward information about the drivers of high medical costs, they favored government price-regulation and backed preventing anti-competitive mergers among hospital systems. By contrast, they were concerned about how changes to benefit design, such as tiered or narrow networks, would impact access and quality.
This research, supported by Arnold Ventures, convened 40 adults covered by employer-sponsored health insurance in Texas, Washington State, Wisconsin, North Carolina and Pennsylvania.
“We gave employees in these focus groups the opportunity to deliberate over various approaches to addressing high provider prices,” said David Schleifer, PhD, Vice President and Director of Research at Public Agenda. “Even participants who said they were wary of government regulation felt that price regulation has become necessary because prices have gotten out of hand.”
Confusion About Key Cost Drivers
Focus group participants initially assigned blame for rising costs to insurers, pharmaceutical companies and the effects of inflation. They were surprised when presented with data showing that hospital, physician and clinical services accounted for 51% of $4.1 trillion in total U.S. health care spending in 2020.
When they were shown data that indicated health care providers’ prices rose by almost 16% between 2016 and 2020, they cited widespread corporate greed as the underlying cause for sharply rising hospital and physician price increases.
Support for Price Regulation and Limitations on Hospital Mergers
Employees in these focus groups were strongly supportive of either state or federal government playing a role in setting health care provider prices and limiting hospital mergers. Broadly speaking, participants saw government regulation as a way to make pricing more reasonable and predictable. And they believed that anti-trust enforcement could break up monopolies and shield patients from what they framed as price gouging. This mirrors the views that employers expressed in a survey of more than 300 executive decision makers conducted by PBGH and the Kaiser Family Foundation (KFF).
The lack of functional and effective markets in the private health care system is driving the out-of-control health care costs too many Americans face. Effective markets require healthy competition among providers, health plans, drug manufacturers and suppliers. Also essential is transparent information on quality, patient experience, health equity and meaningful choices for consumers. Unfortunately, these conditions are not met in all markets.
Employers Pay Lion’s Share of Premiums
According to KFF, employers paid 73% of family premiums in 2022. But employees in these focus groups didn’t realize that employers typically pay the bulk of health insurance premiums, including those for family coverage. When presented with the data, however, participants could easily see how these high premiums must affect employers’ competitiveness and employees’ compensation.
The employers footing the bill for rising premiums also express significant concerns regarding health care costs. The PBGH and KFF survey of executive decision makers found 83% agreed that the cost of health benefits is excessive. Additionally, 87% believed that the cost of providing health benefits to employees will become unsustainable in the next five to 10 years.
Perspectives on Benefit Design
When presented with three benefit designs that employers could use to mitigate high provider prices – reference pricing in which prices are set based on a percentage of what Medicare pays for medical services; tiered networks based on cost and quality; and narrow networks that do not cover low value providers – these employees consistently preferred reference pricing over tiered or narrow networks.
They believed reference pricing could preserve access to more hospitals and networks than tiered or narrow networks. Among their concerns, however, was the possibility that hospitals and doctors could refuse patients whose insurers used reference pricing. They also worried that if hospitals and physicians earned less money, they would have less incentive to provide high-quality care and that talent could abandon hospitals being paid via reference-pricing in favor of wealthier facilities.
Employees were skeptical of how both tiered and narrow networks would affect access to care and quality. They noted that these models could make care more expensive for people unable to travel to preferred providers, a reality that would exacerbate already-limited access in low-income communities, communities of color and rural areas. Employees also expressed distrust about insurers’ ability to fairly determine which hospitals or doctors provide high-quality care. They believed insurers would use tiered and narrow networks to drive people toward inexpensive, but not necessarily high-quality, care and would not prioritize patient needs.
Open, ongoing dialogue with employees about the drivers of high health care costs and different ways of addressing them can help employers, policymakers and advocates better understand the views, priorities and concerns of people with employer-based insurance.
Learn more about Public Agenda’s focus group findings. Public Agenda’s research was supported by Arnold Ventures.
4 Steps for Large Employers to Meet Fiduciary Duties and Mitigate Legal Risk
May 22nd, 2023
The Consolidated Appropriations Act (CAA) has created both opportunities and risks for employers when it comes to overseeing employee health benefits.
The CAA finally gives employers access to the kinds of cost-benefit data long available with virtually every other business decision. The law equips them to better perform their role as stewards of company and employee finances by assessing the value of the health care services they purchase for employees. Over time, these new insights will likely set in motion an unprecedented shift in the health care market’s balance of power. For that reason, it’s no surprise that vendor compliance with these new pricing, contractual and compensation disclosure mandates has been fragmented, incomplete or non-existent.
Employers must now take steps to develop rigorous fiduciary processes around health care purchasing. Consistently demonstrating good faith efforts to comply with the CAA will lead toward a safe harbor that should mitigate future legal exposure and adverse compliance action. Equally important, employer expectations will compel vendors to either alter their behavior or risk losing important accounts and business.
The challenge employers face should not be underestimated. ERISA makes very clear the liability for CAA compliance ultimately rests with the employer and its designated “plan fiduciary.” This may be an individual plan sponsor (who retains personal fiduciary liability), an internal committee, the board of directors or some combination of these. Although vendors will be instrumental in assisting employers and plan fiduciaries in meeting the CAA’s requirements, employers cannot delegate their fiduciary obligations away and must take steps to engage the CAA head on.
4 Steps Your Organization Can Take to Help Protect Itself from Legal Exposure
There are four steps employers can take today to demonstrate good-faith compliance with the CAA’s fiduciary obligations and mitigate downstream legal exposure and consequences.
1) Develop processes and criteria for evaluating vendor performance. Under ERISA, plan fiduciaries must run their health plan (including pharmacy, vision and dental benefits) solely in the interest of employees and their dependents with the exclusive purpose of providing benefits. They must also avoid conflicts of interest and show the plan pays only reasonable expenses. Because the CAA makes available new sets of transparency information, plan sponsors will find their opportunity and duty to oversee vendors has increased.
Employers must now develop and document a process for monitoring vendor performance for value and alignment with the health plan’s interests. This monitoring process should include regular review of the plan’s vendors to determine whether fees and claims are reasonable. Employers should benchmark their vendors’ compensation against others in the market and should periodically review their current vendors to assess reasonableness and examine the continued suitability of these relationships.
2) Request vendor compensation information. The CAA requires health plan fiduciaries to request details on the direct and indirect compensation their insurance brokers, consultants, pharmacy benefit managers and third-party administrators expect to receive. These compensation disclosures should include a detailed explanation of the services provided and direct and indirect compensation, including bonuses, referral fees, rebates and commissions, as well as the source of that compensation.
If you can’t understand a compensation disclosure document, push until the specifics are clear. Beware of ambiguous phrases like “we may or may not receive compensation.” Ensure the disclosure is signed not just by a representative of the firm, but also by someone in senior management who is able to authoritatively attest to its accuracy.
If the vendor refuses to provide the information or fails to do so within 90 days, employers are required to notify the Department of Labor and terminate the contract. Similarly, if the compensation is excessive or “unreasonable” or if it implies conflicts of interest, the vendor relationship would become a “prohibited transaction” under ERISA that the employer could not lawfully continue.
3) Work with legal counsel to ensure all gag clauses are removed from your service provider contracts. The CAA explicitly bans the presence of “gag clauses” in health plan service provider contracts, which are contractual terms that would restrict an employer’s access or ability to share health care cost and quality data. Prior to the CAA, these were extremely commonplace. Now, contracts entered into after December 27, 2020 cannot legally contain them.
Earlier this year, CMS announced employers will need to submit on December 31, 2023 their first attestation of having removed all gag clauses in their contracts. Moving forward, employers will need to attest annually.
Employers need to take great care in ensuring, with expert legal counsel, that they are compliant with this requirement. More importantly, they should view the CAA’s prohibition on gag clauses as an opportunity to access their full, de-identified claims data, including allowed amounts. Many employers have struggled to receive full information before and had to make health care purchasing decisions in the dark. The CAA has provided the light employers need to access and analyze their data.
4) Request plan-level prescription drug data collection (RxDC) data from your pharmacy benefit manager (PBM). The CAA mandates yearly submission of information on prescription drugs and health care spending, known as RxDC reporting. Often, this data is gathered and submitted in large part by a plan’s third-party administrator and PBM without the employer ever seeing the information.
However, RxDC data, originating from PBMs, contains potentially valuable information for an employer. Specifically, it includes novel information on the financial impact of rebates, fees and other drug manufacturer payments on the health plan and its impact on premiums and employee out-of-pocket costs.
Employers should request their plan-level RxDC data. If your PBM declines to provide it to you, document that you attempted to obtain it. If they do provide it, enlist the help of an independent, third-party pharmacy consultant to analyze the rebate information for new insights on how it affects your plan’s premiums and your employees’ out-of-pocket expenses.
What’s Next for Employers
As the post-CAA health care environment solidifies, new third-party intermediaries will undoubtedly emerge to provide employers with new tools, actionable insight and comparative cost and compensation data around the full spectrum of health care services, from hospitals to consultants to PBMs.
In the meantime, organizations must move forward as effectively as they can in uncovering baseline cost and compensation data. Ultimately, every step toward scrutinizing and defining value in the organization’s health plan is an exercise in fiduciary prudence and sound judgment that ensures organizational resources are used in the most effective way possible.
This content is educational in nature and should not be taken as legal advice. Consult with your legal counsel before making any decisions for your health plan, especially those related to CAA compliance.
One Health Issue Impacting Almost Half of America’s Workforce
May 4th, 2023
Women make up almost half of the U.S. workforce, and over 40% of working women are age 45 or older. Since most women reach menopause between the ages of 45 and 55, women in the menopause transition represent a large, and growing, segment of the workforce.
Impact on Women in the Workforce
A recent survey of more than 1,000 working women found that 40% of women age 50 to 65 years old stated that menopause symptoms interfered with their work performance or productivity on a weekly basis.
Each woman’s experience with menopause is unique. Symptoms vary in severity, duration and impact as well as across race and ethnicity. A woman may experience many symptoms as she transitions into menopause. For many women these symptoms last around seven years, but some women experience symptoms for up to 14 years or longer.
Best Practice Interventions
There are many interventions that can improve both quality of life and the symptoms women experience because of menopause. First and foremost, education and awareness about menopause and the impacts it can have on a woman’s daily life and long-term health is important. Education is also essential to ensure that women are aware of the available treatment options and to clarify their preferences so they can make informed decisions. Read more about interventions in the full issue brief.
A Call to Action for Employers
With an aging workforce, it’s becoming increasingly vital for employers to create a supportive workplace that recognizes and normalizes this stage of life.
Menopause takes place when many women have reached the peak of their careers and when they are likely in leadership positions, and severe menopause symptoms can disrupt a woman’s career and her ability to continue and advance in her role.
Given that employee retention — especially of experienced workers — is a priority for employers, there is a tremendous urgency and opportunity for employers to act.
Read the full issue brief, sponsored by Astellas, to learn more about the effects of menopause, interventions available and other considerations.
The Hidden Cost of PBMs in the Health Care Industry
April 25th, 2023
Pharmacy benefit managers (PBMs) play an essential role in managing prescription drug benefit plans for employers and health insurers. But too often, these corporate middlemen are using tactics that drive up drug prices, limit patient access to needed medicines and contribute to health risks. PBM profiteering is hurting patients, and Congress needs to enact measurable reforms now.
The Role of PBMs
PBMs are organizations that manage prescription drug programs for employers who provide health benefits for their workers. They are supposed to use their purchasing power to negotiate discounts from pharmacies and pharmaceutical companies on behalf of employers, and this should bring down the costs for employers and patients. However, PBMs do not always pass along to their customers all the savings they negotiate.
How PBMs Game the System
PBMs employ a variety of tactics designed to increase profits at the expense of patients and often profit more when higher cost medications are used. One example is when PBMs charge a co-pay or deductible amount higher than what they paid for a medication. They then keep the difference as profit instead of passing it along to their customer or patient. Another tactic is “spread pricing,” or paying pharmacies less than what they’ve charged the health plan, employer or patient. The intentional complexity and lack of transparency in the current system allows PBMs to benefit from high-cost drugs and results in employers, and ultimately patients, paying more.
Impact on Patients and Employers
These tactics have serious implications for both patients and employers. Patients may be forced into costly treatments or have to switch medication because a higher-cost drug offers a PBM a higher rebate, and PBMs determine which prescription drugs patients have access to. In addition, employers are left footing the bill and are most times prohibited from even auditing the PBM to see if they are getting a fair deal and paying a reasonable price. All this can lead to higher risks for patients and increased out-of-pocket costs leading some people to have to make the choice not take necessary medications.
What’s Needed
The nation’s employers are purchasing life-saving health benefits for American workers in a market that is not functioning as intended. The result is that employees and their families are being denied access to affordable prescription drugs. Federal action is essential to curb PBMs’ anti-competitive practices and to require accountability for the industry.
These actions must include:
- Require full and complete transparency and reporting: PBMs and their parent companies should be required to provide strong reporting to employers on costs, fees and total manufacturer revenue, and ensure employers have the right to audit their PBM with an auditor of their choosing. PBMs should not be allowed to engage in workarounds or legal games that skirt these laws.
- Ban spread pricing: PBMs should not be allowed to charge employers, health plans or patients more for a drug than the PBM paid the pharmacy for that drug.
- Require PBMs to pass-through 100% of all rebates, discounts and fees: PBMs should be required to pass on 100% of all rebates and volume or access-based administrative fees to employers and plan sponsors.
- Hold PBMs accountable the same way employers are held accountable: Employers are required as plan fiduciaries to be good managers of the health care benefits they provide employees and act in a manner that minimizes costs. PBMs should be held to the same level of accountability as employers and health insurance plans.
Read more about how PBMs are failing American workers.
A CFO’s Guide to Health Plan Fiduciary Leadership
January 17th, 2023
Recent passage and implementation of the Consolidated Appropriations Act (CAA) of 2021 creates new risks and opportunities for employers who self-insure their health benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA).
What Employers Need to Know
The CAA mandates employer access to new and critically important insights into the prices they’re paying for employee health care services – details they have been unable to previously obtain from vendors to whom they pay millions of dollars each year to negotiate on their behalf. Finally, employers can evaluate the cost and quality of services they are purchasing from providers and other vendors and make informed procurement decisions. In fact, the law requires employers to demonstrate that the health care services they buy for their employees are cost-effective, high-quality and meet mental health parity and pharmacy benefit requirements.
This means that employers must take steps to establish oversight procedures and processes to document their efforts to comply with the CAA as fiduciaries, similar to the governance practices employers have already established for their 401(k) and retirement plans.
Implementing an effective health plan oversight and audit framework, with documented procurement processes, can substantially reduce corporate exposure for companies and individual directors, officers and employees. Many employers currently lack adequate controls in their existing service agreements, have historically tolerated unreasonably high fees and costs and often rely upon financially conflicted intermediaries for advice.
The CFO’s Role
It is because of these systemic barriers to compliance that CFO leadership is particularly needed to guide corrective action. Compliance may very likely require companies to adopt new business practices, amend existing health benefit contracts and ensure insurance policies for Directors and Officers cover claims involving employee health plans.
The heightened fiduciary risk of being a health plan manager is occurring at a time of increasing health plan expenses, economic pressures, workforce recruitment and retention challenges and a seemingly insatiable employee demand for immediate, personalized solutions that foster overall well-being. CFOs who embrace a health plan fiduciary framework to mitigate litigation risk may find that compliance opens new opportunities to reduce wasteful health care spending, improve predictability and enable better support for the health and wellbeing of their employees and families.
An Opportunity to Address Workforce Health Challenges
The same health plan data that can help CFOs mitigate fiduciary risk can also unlock opportunities for human resource and benefit leaders to better address workforce health challenges and manage delegated services and vendors. Fiduciary leadership that is aligned across finance, human resources and benefit teams can catalyze a transformation of employee health benefits from a liability to a valuable, strategic asset.
Click here for our guide to establishing a strategic fiduciary framework to enhance the value of employee health benefits.
4 Key Employer Health Trends for 2023
January 4th, 2023
With the pandemic’s grip finally easing, employers are shifting their focus toward key objectives that can support sustained improvements in health care quality and meaningful reductions in cost. Here, the top four trends for large health care purchasers to watch as we head into 2023.
1. Improving health equity
COVID-19 exposed major disparities in the U.S. health care system and helped fuel an employer commitment to tackle the systemic inequities faced by underserved and minority communities. Employers understand that by focusing on health plan design, care access and social determinants of care, they can make important strides toward providing more equitable and cost-effective care.
In the coming year, more large companies will be looking to cover preventive medications and services, supporting pregnancies through doula services, developing data capabilities to identify and help address social determinants, improving remote chronic disease management, and making benefits and health care simpler to access and navigate for underserved populations.
2. Strengthening primary care
Employers realize that robust primary care provides the foundation for a healthy workforce and is an essential starting point of high-value health care system. Studies show that advanced primary care, or primary care systems that incentivize integrated and coordinated care, can lower overall health utilization, improve outcomes and reduce costs.
Key strategies employers are expected to target to bolster primary care include supporting consistent advanced primary care standards for payers, providers and health care purchasers to incentivize high-quality, lower-cost primary care. Other employer efforts are likely to focus on working with policymakers to advance the development and application of alternative payment models that support and enable advanced primary care. Equally important will be the continued evolution of tools and systems that enhance consistent access to behavioral mental health in the primary care setting.
To support purchasers in their efforts to identify and work with top-performing primary care practices, PBGH recently issued a first-of-its-kind collective request for information (RFI) on behalf of members to identify provider practices that meet established standards of advanced primary care and that are willing to partner — the results of which will be used in network design and/or in direct contracting arrangements.
3. Taking fiduciary responsibility for health care
The Consolidated Appropriations Act (CAA) of 2021 imposes fiduciary obligations for employers who self-insure under the Employee Retirement Income Security Act of 1974 (ERISA). That means self-insured employers will need to demonstrate that the health care services they purchase for employees are cost-effective and high-quality. As a result, employers will be working to harness newly available hospital price information to drive cost-effective, quality care. Critical to these efforts will be tools that can make newly transparent price data meaningful and actionable. In addition, collective employer efforts to identify specific examples of overpricing will likely emerge to support negotiating leverage with hospitals and providers. Ultimately, employers’ new fiduciary obligations may spawn a shared national database with companion analytics that purchasers can use for evaluating pricing variation to help determine fair prices.
4. Reforming pharmacy benefit managers (PBMs)
A key legislative objective for purchasers in 2023 will be passage of legislation similar to the last Congress’s Pharmacy Benefit Manager Transparency Act of 2022. Comprehensive federal legislation would empower the Federal Trade Commission to increase drug pricing transparency and hold PBMs accountable for numerous unfair and deceptive practices that increase consumer costs and limit access of prescription drugs. In addition to expected action from Congress, a Federal Trade Commission investigation into PBM business practices is underway. Employers, meanwhile, will increasingly be looking to new market entrants that promise more transparent PBM services and put employers in control of their data to gain greater control over rising drug costs and employee access to quality care. PBGH is working across multiple channels to raise awareness about the extent to which PBMs have distorted the prescription drug supply chain – actions which put lives at risk, constrain employee access to medications and add billions of unnecessary costs to employers’ health care expenses.
High Health Costs Hurting Employers’ Ability to Hire and Keep Workers
January 3rd, 2023
A new survey of U.S. employers underscores the widening damage done by rising health care costs: Nearly 75% of those surveyed say health care expenses are squeezing out salary and wage increases and more than 80% believe health costs are negatively impacting their ability to stay competitive in today’s labor market.
The Pulse of the Purchaser survey, conducted online in August and September by the National Alliance of Healthcare Purchaser Coalitions, assessed employer views on health care and the workplace environment. Respondents included 152 employer-members of organizations affiliated with the National Alliance. The purchasers represented an array of sectors and ranged in size from more than 10,000 employees to less than 1,000.
‘A Street Fight’
Michael Thompson, National Alliance president and CEO, said the survey results bring into sharp relief the growing challenges employers face in recruiting and retaining talent amid a volatile labor market and the unrelenting financial burden of health care.
“The consensus among many of the responding employers is that attracting and retaining employees has become a street fight,” Thompson said. “Concerns about a recession and runaway inflation make it even more critical that employers are able to hire and keep top talent and getting unreasonable health care costs under control has a far-reaching impact on wages and ability to compete.”
The survey found that post-pandemic, finding and keeping employees has become an even higher priority for nearly 80% of employers, with 100% agreeing that health and wellbeing benefits are essential to effective hiring. Rising health care costs also remain a significant concern for employers, with the biggest cost drivers of employer-sponsored health benefits coverage for employees and their families being drug prices (93%), high-cost claims (87%) and hospital costs (79%).
Ninety-seven percent of respondents believe hospital prices are unreasonable and indefensible, and 93% say hospital consolidation has not improved the cost or quality of services. Additionally, employers familiar with transparency tools such as those from RAND, National Academy for State Health Policy and Sage Transparency are up to 10 times more likely to strongly disagree that hospital prices are reasonable and defensible.
Hospitals Continue to Seek More Money
The results of this survey come at the same time the hospital industry – a primary source of rising health care costs in the U.S. – is asking Congress to stop scheduled Medicare payment cuts and provide more federal relief due to challenging economic conditions. But a recent analysis of SEC filings by the Kaiser Family Foundation found that the nation’s three biggest for-profit hospital chains each had positive operating margins that exceeded pre-COVID levels for most of the pandemic, including as recently as the third quarter this year.
In short, the industry continues to cry hungry with two loaves of bread under its arms.
Strategies to Lower Costs
Almost half (47%) of employers, according to the Pulse of the Purchaser survey are using centers of care excellence; within the next three years, many others are looking at tiered networks (46%), sites of care (43%), contracting and performance guarantees tied to Medicare pricing and reference-based pricing (36%).
More than 90% of employers say they have implemented or are considering high-cost claims management, mental health and substance use access and quality, hospital quality transparency, hospital price transparency and whole person health.
Employers are open to a range of policy and regulatory remedies, including drug price regulation (82%), surprise billing regulation (79%), hospital price transparency (76%) and hospital rate regulation (72%).
States are also sending a strong signal that providers need to compete on value and will no longer be allowed to engage in anti-competitive practices to gain market power. In states as varied as California, Washington, Texas and Indiana, state lawmakers are working to eliminate anti-competitive contracting practices and increase transparency around pricing, quality and costs.
The Influence of the CAA
At the federal level, the landmark Consolidated Appropriations Act of 2021 (CAA) requires plan sponsors be given access to new and critically important health care pricing information. At the same time, it imposes fiduciary obligations for employers who self-insure under the Employee Retirement Income Security Act of 1974 (ERISA).
Under the law, self-insured employers will need to demonstrate that the health care services they buy for employees are cost-effective and high-quality. That means they must take steps now to ensure appropriate oversight procedures are in place that will enable them to document their efforts to comply with CAA’s provisions. It also means that employers will increasingly have access to new and critically important insights into the prices they’re paying for employee health care services – details they have been unable to previously obtain from vendors to whom they pay millions of dollars each year to negotiate on their behalf.