By Sabrina Corlette, Karen Davenport, and Emma Walsh-Alker
The excessive and rising price of well being care is lowering individuals’s entry to vital companies, suppressing employees’ earnings, and lowering enterprise competitiveness. Many state worker well being plans (SEHPs) are the most important industrial well being care purchaser of their state, making them uniquely located to sort out well being care prices and exert stress on insurers and suppliers. In 2021 we launched findings from the primary complete, nationwide survey of SEHP directors relating to plan choices and states’ price containment methods. On June 28, 2023, we launched an replace on these plans’ progress within the final two years, in addition to the affect of latest federal coverage adjustments.
Within the two years since our final report, states have loved flush budgets and wholesome rainy-day funds whereas well being care utilization has remained under pre-pandemic ranges. However these good occasions for SEHP directors won’t final perpetually and SEHPs, like different payers, count on prices to extend. SEHPs are additionally topic to new federal necessities selling better transparency of well being care transactions below the Consolidated Appropriations Act of 2021 (CAA) and protections for coated employees from sudden out-of-network billing below the No Surprises Act (NSA).
In a survey of fifty SEHP directors and observe up interviews in 11 states, we realized about states’ challenges and successes implementing a variety of price containment methods. Whereas solely a handful of SEHPs report with the ability to quantify the financial savings generated by any of those methods, a couple of initiatives emerged as promising candidates for price financial savings. Under are some key findings from our examine:
Spaghetti on the Wall: SEHPs Strive A number of Methods to Constrain Value Development
As they did in 2021, SEHPs report that prescription drug and hospital costs are the highest drivers of price progress for his or her plans. Nevertheless, as in 2021, SEHPs’ methods stay primarily centered on prescription drug prices and enrollee utilization of companies, quite than hospital costs. Of the highest 5 price containment methods being pursued by states, just one (Facilities of Excellence) has the potential to have an effect on hospital pricing. Though no single price containment technique surfacedas a magic bullet, promising efforts included reference pricing, tiered community plans, and multi-payer buying initiatives.
Accountability for Third-Get together Distributors
All however 4 states in our survey use a third-party administrator (TPA) to assist with plan and community design, customer support, and/or claims processing. Whereas most SEHPs report that they rely completely on their TPA to barter with suppliers and handle plan networks, lower than half of states (21) report that they embody price containment targets for TPAs throughout their procurement processes. Thirty-two SEHPs report that their TPA contracts embody accountability mechanisms if their TPAs fail to curb price progress. Nevertheless, in interviews a couple of SEHP directors reported that they’re taking up extra community design in-house or have plans to take action, out of frustration with what they understand as foot-dragging, incapability to create personalized approaches, and even lively resistance to price containment by their TPA distributors.
Information: Extra Availability however Restricted Capability to Use It
Since publication of our 2021 report, federal guidelines requiring plans and hospitals to publicly put up worth knowledge, in addition to a prohibition on gag clauses in provider-payer contracts, went into impact. SEHPs report that these coverage adjustments have considerably improved their entry to claims and worth knowledge, however vital boundaries constrain translating improved entry to knowledge into extra aggressive price containment methods.
Restricted Consideration to Limits on Shock Billing
As plan sponsors, SEHPs are liable for implementing the federal No Surprises Act. Nevertheless, 34 SEHPs reported not figuring out, as of late 2022, whether or not any out-of-network suppliers had filed billing disputes towards their TPAs or insurers, and solely three SEHPs had a way of what number of disputes had been resolved. No SEHP reported that the NSA was influencing their community design methods.
SEHPs broadly report a dedication to sustaining protection affordability for his or her plan members. They proceed to pursue a number of methods to constrain price progress. Nevertheless, extra SEHPs must systematically measure the affect of their price containment methods, with a view to assess what’s, or will not be, working. SEHP directors discover their analysis efforts hindered by challenges accessing and utilizing claims and pricing knowledge, and whereas they report a need to make use of this knowledge to tell community and plan design, they don’t seem to be but well-situated to take action.
Efficient price containment methods for SEHPs require tradeoffs, and SEHPs should steadiness the competing calls for of stakeholders. Mitigating potential backlash typically entails injecting better complexity and administrative overhead (and value) into the initiative’s design and implementation. SEHPs additionally report frustration that their TPA distributors are sometimes not agile or prepared companions of their price management efforts.
SEHP directors are bracing for rising costs and a tightening fiscal image. Figuring out and increasing on price containment methods that successfully goal major price drivers, generate minimal “member friction,” and that don’t require appreciable administrative overhead is difficult for SEHPs. Nevertheless, a number of SEHP directors are demonstrating that it’s doable to implement methods that maintain promise for lowering supplier worth inflation whereas additionally minimizing stakeholder pushback.
Obtain the total report right here.
Entry an interactive state map and downloadable knowledge tables right here.
