Supporting Non-Hospital Birthing Options: Employer Strategies to Improve Quality

May 23rd, 2022
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Maternal infant health outcomes in the U.S. remain the worst among high-income countries, and Black women in the U.S. are nearly three times more likely to die from pregnancy-related complications than white women are. Additionally, U.S. women of reproductive age are significantly more likely to have problems paying their medical bills or to skip or delay needed care because of costs.

To underscore the high costs disproportionate to the poor maternal health outcomes, the cost of maternity care represents American employers’ second-highest annual health care expenditure – $1 in every $5. Faced with unacceptable results, employers are looking for pathways to improve maternal health care quality, affordability and the overall patient experience.

Improving Quality and Lowering Costs

Consumer surveys have shown that more patients are seeking non-hospital, community-based childbirth options, such as midwives, doulas and birth centers. This is particularly true for birth participants of color who are looking for alternatives to the hospital-physician childbirth experience.

Recent CDC 2020 vital statistics data mirror what we have seen from consumer surveys. Although overall births declined, in 2020 the number of births in birth centers nearly doubled.  This is a significant indication that more women want choice in their maternity care team and care location and that more families, when given a choice, are seeking a non-hospital childbirth option.

Non-hospital maternity care options can help to address the problem of high-cost, low-quality care. Evidence shows the use of midwives improves overall maternal and infant health and decreases the cost of maternity care. In fact, research shows that collaborative care led by certified nurse midwives can result in 22% fewer primary C-sections. It also helps address a growing shortage of perinatal health providers. Despite these benefits, however, certified nurse-midwives are vastly underutilized, delivering only 9% of babies nationally.

A birth center is a midwife-led childbirth facility that offers individuals and families a more natural, lower intervention and less medicalized childbirth experience. Birth centers are freestanding facilities and separate from acute obstetric or newborn care where care is provided in the midwifery and wellness model of care. Birth centers typically have relationships with other community health providers and arrangements with other facilities, such as hospitals, for transfers to other levels of care when needed.

The CMS Strong Start program demonstrated that women who received prenatal care in birth centers had better outcomes and lower costs. This included lower rates of:

Additionally, costs were more than $2,000 lower per mother-infant pair during birth and the following year for women who received prenatal care in birth centers.

How Purchasers Can Support Non-Hospital Options

Employers know that improving maternal health outcomes in the U.S. and reducing disparities will require changes to the existing system of care to make it more patient centered. Here are three ways employers can influence the health system and health plan leaders’ perspectives to address the barriers preventing birth center expansion, collaboration between hospitals and birth centers and access to midwives:

In response to the lack of comprehensive, coordinated care and the overmedicalization of childbirth PBGH has developed several strategies to help employers impact their maternity marketplace.

6 Things Every Employer Should Know About Their Pharmacy Benefit Manager

May 11th, 2022
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Pharmacy benefit managers (PBMs) ostensibly work on behalf of self-insured employers to manage drug spending and ensure employee access to preventive and curative medications. But an industrywide lack of transparency, coupled with complex and often-confusing policies and contract terms, has opened the door to PBM profiteering. Large, self-insured employers – and their employees – are the ones paying the price.

Here are six things employers should keep in mind when evaluating the drug supply chain and PBMs:

1. The higher the drug price, the more money the PBM makes. Like drug manufacturers and wholesalers, PBMs are paid a percentage of retail drug prices. They’re incentivized to exclude lower-cost drugs and promote higher-cost medications in their approved drug lists or formularies. This means employers often end up paying higher drug prices for branded medications when clinically equivalent generic drugs exist. Branded drugs will at times, be needed, knowing that, every employer should engage in a detailed negotiation related to rebates and insist that all earned rebate dollars are passed back to the employer.

2. Industry consolidation is contributing to reduced transparency and higher costs. The three leading PBMs are controlled by national health care enterprises, managing nearly 90% of prescription claims in the U.S. These consolidations create potential conflicts of interest between business units and make it nearly impossible to trace the flow of funds surrounding prescription drug costs. Every employer should take their PBM out to bid at the end of every contract cycle and consider working with new market entrants that have adopted a more innovative, transparent approach, aligned with the needs of employers and their employees.

3. The big three PBMs are adding cost and opacity by layering on new organizations that contract directly with drug manufacturers. The three leading PBMs all have group purchasing organizations (GPOs) to serve as intermediaries between drug manufacturers and their respective PBM operations. Even though it’s not clear what, if any, value the GPOs will create, research suggests they’re expected to extract an added 5-8% in fees from the drug supply chain. Additionally, because they’re replacing PBMs as the organizations that contract directly with drug manufacturers, the GPOs will help insulate PBM operations from audits and potential legislative cost remedies, including new transparency requirements of the Consolidated Appropriations Act. Every employer should scrutinize their PBM contract and ensure they have access to the data ownership and audit rights they need to evaluate and optimize their pharmacy benefit.

4. Employers should focus less on rebates and more on total manufacturer revenue. In PBM contract negotiations, large employers typically want a guarantee that they will receive 100% of manufacturer rebates, often missing the contractual loophole that caps these rebate payments at a fixed dollar amount, preventing the employer from collecting on total rebates earned. This is money PBMs have long kept for themselves to boost profitability. On top of an employer’s rebate dollars, a PBMs collection of administrative fees has also increased, with transaction and claims processing fees as recent additions to client invoices. Employers should comfortably question every fee that gets included in their PBM contract. To implement the strongest possible contract, every employer should push for a guarantee of a major percentage of all manufacturer revenues, or the higher of, the guaranteed rebate amount or actual manufacturer rebates earned.

5. Each PBM creates its own definitions of brand and generic drugs. Almost every single PBM contract begins with a Definitions section. PBMs have long used widely varying definitions for categorizing drug types to maximize their rebate earnings. To make matters more confusing, the initial Definitions section isn’t the only place PBMs define contractual terms; they might do so in several other spots throughout the contract. In doing this, PBMs are guaranteeing they maximize their opportunities to make decisions that continue to fuel their profits. Every employer should be vigilant about their PBM’s defining and redefining of contractual terms as it directly impacts the employer’s financial plan performance. Your contracts begin with an all-inclusive Definitions section, using the readily accessible industry standards as the source, and include a clause dictating that the terms and their definitions are only available once.

6. Three critical questions should be asked and answered before signing a contract. PBMs have long thrived in an environment characterized by inordinate complexity and a lack of transparency. For this to change, every employer must become more informed and proactive to use their purchasing power to ensure PBMs are consistently working in the best interests of the employer and its employees.

Use this information and the following set of questions in your upcoming discussion with your PBM:

 

Advice from a Purchaser Who Took on Health Care’s Status Quo and Won

April 14th, 2022
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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:

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
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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
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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
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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
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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:

Health Plan Opportunities:

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
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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
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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:

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
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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.”