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Employer Advocate Asks Senators to Empower Value in Healthcare

Analysis  |  By Philip Betbeze  
   July 19, 2018

An employer advocacy group says government action is necessary to develop effective and efficient healthcare delivery, but regardless, healthcare providers should expect more activism in healthcare delivery.

Pacific Business Group on Health CEO David Lansky testified Wednesday to a key Senate committee that government action is needed to develop an information infrastructure that will drive the evolution of a more effective and efficient healthcare system.

Providers would be well advised to be prepared whether Congressional action is ultimately taken.

Members of the Pacific Business Group on Health, a purchaser coalition made up chiefly of large employers that purchase healthcare services for their employees, spend more than $100 billion a year on healthcare services for about 12 million employees and their dependents, but Lansky says even that heft can't fully realize the changes that are needed to judge whether health services are being delivered efficiently and whether optimal health outcomes are achieved.

"As a result, neither consumers nor purchasers can identify and reward high quality care, and healthcare providers and suppliers are given little incentive to compete or continuously improve their performance," he told the Senate Health, Education, Labor and Pensions committee in prepared testimony.

Lansky argued that public and private payers need to collaborate more on holding healthcare accountable for outcomes.

To make that happen, he asked lawmakers to create an information infrastructure and use federal purchasing power to drive value-based competition. Public programs pay for about half of the healthcare purchased each year in the U.S.

"The techniques of value purchasing could drive the evolution of a more efficient and effective health system, but those approaches will not be effective until we have meaningful transparency of cost and outcomes data," he said.

It’s difficult to recommend how healthcare leaders should react strategically to Lansky's specific points based on testimony to a Senate committee, but they should note the way the wind’s blowing on being able to demonstrate value and quality outcomes, as many already have.

It's not the first time PBGH has reached out to government for help in injecting value principles into healthcare. If government payers adopt similar strategies, they’d better be prepared. Among conclusions from Lansky's testimony, even without the government support he seeks, value will continue to inch forward. Healthcare leaders should expect:

  1. More direct contracting: Cutting out the insurance middleman has worked well in many cases, Lansky said. This is one area where healthcare providers can act on their own to move toward value.
    "Many of our members, as very large purchasers, have found that they can achieve more effective payment and delivery arrangements by working directly with provider organizations rather than through large insurance carriers," said Lansky.
  2. More consumer incentives to encourage high-value care: This is another area where healthcare providers can influence their own path toward quality. "In our Employers Centers of Excellence Network program, employees of Walmart and Lowes stores, for example, face zero cost sharing if they choose to go to a carefully selected, high quality hospital for surgery," he told the committee. Lansky argues more information is critical to drive more providers to base their business on value, and that similar principles could be effective in many public programs.
  3. More transparency and performance information: PGBH members provide cost and quality transparency information to their employees already, especially in programs that include high deductible health plans. But there are significant concerns about the usefulness of the tools as well as consumer engagement with them. "Patients also want to know what outcomes they can expect from care, and whether outcomes vary across providers," Lansky said in his testimony.  
  4. More instruction on effective delivery of care from employers: Purchasers once subscribed to the managed competition model in which the purchaser held the health plan or provider system accountable for outcomes and total cost of care for a population but didn't consider it their business to tell providers how to deliver care, Lansky said. But that's changing. Many PBGH members engage vigorously with provider partners to ensure conformity with evidence-based guidelines, Lansky said, and thus providers should expect employers, and perhaps government, to be more prescriptive about improvement priorities, methods and measures.

Even large employers that join forces in groups like PBGH don’t have the combined size and scale to compel widespread change given the confusion and conflicting incentives that volume-based reimbursement from government payers still causes, but health care providers who want to be ahead of the curve in what's probably coming should probably listen to them.

Congress is.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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