Employers are sharing data on health care prices, but real change is slow

Employer-sponsored health plans and health insurance companies are expected to comply more with rules requiring them to publish their price data than hospitals in 2021.

But employers will now need to step up and start using the information to ensure their employees are getting the best deals when they seek medical care.

The Consolidated Appropriations Act of 2021, which took effect in 2020, raises the bar for employer-sponsored health plans, which as fiduciaries are required to pay fair prices for services provided. The law — along with the Transparency in Coverage Rule issued in November 2020 — required health plans to publicly disclose their negotiated prices starting July 1, 2022, and hospitals were required to do the same in 2021.

This means that employers will have no excuse for not knowing whether they are paying reasonable rates.

According to a Rand Corp. report, employers and health insurance companies are paying hospitals more than double what Medicare would pay in 2020.

Most hospitals failed to comply with a similar hospital pricing requirement that took effect in 2021, according to the Patient Rights Advocate, which works on price transparency in healthcare. This group reported that only 14.3% of the 1,000 hospitals sampled were in compliance with the transparency rule one year after it went into effect.

“Employers want health care to be transparent,” said James Gelfand, president of the ERISA Industry Committee (ERIC). “We expect massive compliance with the coverage transparency rule,” he said.

Fines against health plans and insurers of $100 per day per member for noncompliance are much larger than the initial fines for hospitals, which were raised from $300 per day initially to a maximum of just over $2 million per year for hospitals with more than 30 beds .

It will probably take some time before employers absorb the new information and use it.

“It can take several years for big changes in the markets to begin,” Gelfand said. “But we think that over time, making that information transparent will lead to better prices because patients and employers will demand better prices, and insurance companies will then negotiate better prices,” he said.

Useful data for analysts

For now, the data is expected to be most useful to analysts and application developers who can organize and make sense of it, Chris Deacon, head of healthcare at VerSan Consulting LLC, said in an interview.

“These are huge amounts of data that are meant to be taken by third-party app developers, data processing companies that can take the data and do something with it,” she said. VerSan Consulting, in Moorestown NJ, works with self-funded employer groups that cover more than 1 million people to provide health care strategy and cost containment.

However, employers who sponsor health plans covering about 160 million people in the U.S. are required by law to comply with transparency requirements and pay only reasonable plan costs, Deacon said. To do that, employers and the analysts they hire need to become familiar with the data, she said.

“They have to know about it to use it,” Deacon said.

“It will no longer be an excuse to say, ‘My carrier wouldn’t give me my data,'” she said. “Not only do you have a legal right to have that data, you now have a legal obligation to have the data. And once you have that obligation, as a fiduciary, your ability to become a prudent purchaser of health care — you can now fulfill it,” she said.

That means employers will inevitably face class-action lawsuits, Deacon said. Lawsuits against health insurance companies have not been successful because employers are the ones responsible for purchasing health care on behalf of their employees, she said.

Even employers adept at using Rand data, comparing hospital prices paid by Medicare with prices paid by employers and private health insurers, doubt the new data will be of any use to them in the short term.

Using data collected specifically for Turner Industries LLC by Rand, this Baton Rouge, La.-based petrochemical maintenance contractor recently discovered that it had paid a large Houston-area hospital with which it directly contracts about 840% of the rates of Medicare in 2020, compared to about 220 percent of Medicare rates in 2019, said Dan Burke, Turner’s director of corporate payments. He declined to name the hospital. Turner provides health coverage to nearly 20,000 employees and family members.

It’s unclear why the hospital’s charges have jumped so dramatically, Burke said. “That number might be one giant statement that really throws those numbers off,” he said. The company has a health coaching program that directs plan members to high-value providers, which it says could steer employers to more expensive providers. “Given the nature of the governance that’s going on there, we won’t be doing anyone a favor if we continue this governance,” he said.

Data leads to monetary incentives

Turner publishes its price data on its website for employee access, along with a price estimator and price comparison tool and detailed explanation of benefits documents detailing what is covered. The information is also posted on the website of the health insurance administrator, Highmark Blue Cross Blue Shield, Burke said.

However, few non-specialists are likely to see much use in most of this information, and for health plan sponsors, “when you look at this and make comparisons with other carriers and other plans, it’s not always an apples-to-apples comparison.” Burke said. Although Blue Cross Blue Shield plans have large networks in the U.S. and often have the best discounts on hospital list prices, “that’s not true for every procedure,” he said. “United Healthcare or Aetna or Humana may have better discounts for a certain procedure,” he said.

Burke says he relies on insider information he gets from Rand and data tools developed by the Indiana Employer Forum and the National Academy of Public Health Policy (NASHP) that use public and private data to compare hospital prices and quality as the best measure of whether it is getting fair prices from hospitals. Turner Industries plans to simplify that information to make it easy for employees to use, and is currently using its data to provide cash incentives for employees to use high-quality, lower-cost providers for services such as imaging and colonoscopies, he said. .

Employers combine the Rand data with data from Sage Transparency and the National Academy of Public Health Policy showing health outcomes, Ashley Bacott, president of health care consultancy ProvInsure, said in an interview. That could mean a company is willing to pay more for providers who have lower hospital readmissions, he said. ProvInsure is the consulting arm of Rosen Hotels & Resorts Inc. in Orlando, Florida.

But if companies find that others in the same area are paying lower prices for the same services, especially at the same hospitals, that will lead to changes, Bacot said.

“Ultimately what’s going to happen is once that employer feels that fiduciary responsibility and they read in the paper that Company X is paying $18,000 and they’re paying $36,000 for the knee, they’re going to feel offended, I think, and maybe there will be that, “Hell no, we won’t take it anymore,” reaction.

Joe Wisniewski, head of platform growth for San Diego-based healthcare data company Turquoise Health, said the easiest way for employers to start analyzing data is through simple procedures like preventive blood tests and MRIs that don’t depends on age or other factors. Costs for knee replacements are more variable because they depend on age and health, he said.

“The simpler the process, I think the more profits an employer can get by shopping around for health care,” he said.

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