The Exec: PBGH's Elizabeth Mitchell on Transparency, Costs, and Employer Empowerment

"Informed negotiations always lead to fairer terms," says the president and CEO.

Employers face tremendous pressure to offer affordable, quality healthcare for their employees. This is particularly true for self-insured employers who pay their own healthcare claims.

No one defines these problem and their solutions better than Elizabeth Mitchell. As president and CEO of Purchaser Business Group on Health (PBGH), Mitchell leads a nonprofit coalition representing 40 private employers and public entities that collectively have $350 billion in annual health care buying power.

“For most employers, healthcare benefits are their second-largest expense. It’s in the interest of employers — and for their employees — that they be good fiduciaries and eliminate wasteful spending.”

“But in order to do so, they need access to data from the other relevant parties: insurers, providers, insurance brokers, Pharmacy Benefit Managers [PBMs]. Simply put, the commercial health care market is not functional because buyers do not have access to needed information to make informed purchasing decisions.”

In other words, healthcare is not only broken but expensive — and lack of transparency is a big reason why. The Consolidated Appropriations Act of 2021 (CAA) clarified that employers are entitled to data from their health plans and providers to gain this transparency.

In this exclusive with HealthLeaders, Mitchell details the pressures employers face, why transparency is essential, and the initiatives PBGH has launched to help employers take control of their destinies.

HealthLeaders: Explain the new pressures on employers as health care plan fiduciaries, including the risks of employee lawsuits.

Elizabeth Mitchell, President and CEO of PBGH: First, it's important to point out that 46% of Americans, nearly half, get their health care coverage from employer-sponsored insurance. Under the CAA, employers are legally accountable as fiduciaries for their health plans, meaning they are required to provide their employees with the best health care benefits for the best price.

Traditionally they have relied on their health plans to do this, but it is increasingly clear they have not acted in employers’ best interest. Self-insured employers as the accountable fiduciary — [those who pay for their own healthcare claims] — need to take on a significantly larger role in selecting and managing health care vendors and partners.

To fulfill that responsibility and to be good stewards of their own resources, employers need access to information about health plan and provider prices, claims data, care quality, patient outcomes and more.

Without this data, employers are operating in the dark. With no visibility into varying prices or quality, it makes it difficult, if not impossible, for employers to negotiate for the best possible care and terms.

This is an impossible position and leaves employers vulnerable to lawsuits from employees unhappy with the cost and of health care. There have been several high-profile lawsuits filed recently by employees against their employers alleging that they failed their fiduciary responsibilities by overpaying for prescription drugs and other services. We expect those lawsuits to continue.

HealthLeaders: Why are price and quality transparency essential for lowering costs and improving care outcomes?

Mitchell: When employers have that transparency, they are in a much better position to select the best provider partners, negotiate rates and coverage, and direct their covered members to the providers and facilities with the best outcomes.

Imagine trying to buy a car with no information on safety, gas mileage, or even the actual price of the car? Informed negotiations always lead to fairer terms.

Transparency has the systemic effect of creating competition on cost and quality — something that does not currently exist in health care. That helps not only employers, but the overall economy because, let’s face it, the insurmountable cost of health care in America makes its way into just about everything we buy and consume.

HealthLeaders: What is the status of CAA compliance and what story does the data tell so far?

Mitchell: Now that insurers and hospitals are required to disclose their prices and arrangements, employers are getting their first look into what was previously hidden. What they’re finding isn’t pretty: Conflicts of interest between brokers and providers, between insurers and providers, overpricing of health care services, and more.

What data is available shows that the exact same service — like an MRI — may cost 5x as much at a neighboring facility with no difference in quality.

Many health plans and providers are still not fully compliant with CAA and continue to withhold key information — on outpatient care, for example. But PBGH members are using what they can access.

HealthLeaders: What specific actions does PBGH recommend for employer CAA compliance?

Mitchell: We work closely with PBGH members on how to be effective fiduciaries. [Here, Mitchell identified three PBGH initiatives.]

1. New CAA Data Demonstration Project. A first initiative of its kind, combining CAA hospital and payer datasets with provider quality metrics as well as specific employer demographic and claims data from five employers in 10 geographic markets. With this project, PBGH will:

• Create fair-cost commercial benchmarks to help PBGH members assess whether what they are paying is fair and appropriate.
• Analyze cost variations so employer members can compare — for the first time — whether it’s the best “deal” by hospital, by network, and by carrier from “actual” price at the service code level (versus self-report aggregated carrier data).
• Correlate price variation data with provider quality data to understand value.

2. Contracting standards for PBGH members. These standards — which are for PBMs, Advanced Primary Care and maternal health — enable purchasers to get the optimal value for their health care spend but require significant expertise to develop and then enforce. Performance measures are also included in these contracting standards, leveraging PBGH’s technical expertise and decades of work on quality and cost measurement.
3. Direct contracting. We just launched a very untraditional Advanced Primary Care health plan in Puget Sound with Boeing and eBay . . . 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.

Zooming back out to healthcare affordability at large, Mitchell adds: “We’ve been talking about this crisis for a long time. Employers find themselves in an untenable position with a nonfunctioning commercial marketplace and lack of support to meet their obligations under the Consolidated Appropriations Act.

“Through thoughtful collaboration and bold innovation, we can reshape the system to better serve all Americans.”