U.S. Senate Testimony: Employer Innovations that Reduce Health Care Costs

Summary of Written Senate Testimony by Cheryl DeMars, President and CEO, The Alliance, Madison, Wis.
Senate Committee on Health, Education, Labor and Pensions Hearing on Nov. 28, 2018

The Alliance is a not-for-profit health care purchasing cooperative owned by 240 self-funded employers that provide health benefits to more than 85,000 employees and their family members in Wisconsin, Illinois and Iowa. Member employers range in size from 60 to 8,700 employees, with an average of about 400 employees. The cost of health care is a critical issue for these employers and their employees.

We are using three approaches to impact health care costs.

1. Pooling our purchasing power to contract directly with providers enables us to create a network of providers that gives our employees access to the doctors and hospitals they want to see at rates that are competitive in our market. Our goal is to buy health care based on value — balancing quality and appropriateness with cost. We build partnerships with the hospitals and clinicians in our communities, because we know that improving health care value is a team sport. Provider consolidation is a threat to this strategy.
2. Investing in high-value primary care – primary care has the potential to improve health and lower costs, but our current delivery system often falls short of this promise. To close this gap, some employers are creating workplace-based primary care clinics with great success. The Alliance is pursuing “shared-site” clinics to help smaller employers enjoy these same benefits. We are also developing new payment models to encourage high-value primary care within the delivery system.
3. Moving market share to high value providers improves value by using providers who deliver good care at a lower cost. The Alliance QualityPath® program has used this strategy to save more than $1.5 million in three years on total hip replacements, knee replacements, and CT and MRI scans. Hospitals and doctors apply for the program and must prove the quality and appropriateness of their care on national quality measures. They must also adopt practices that reduce unnecessary care and agree to a lower bundled price backed by a warranty. Employers encourage their employees to use these providers by reducing or eliminating their out-of-pocket costs.

To support these strategies and other employer efforts, The Alliance asks the Senate HELP Committee to consider five priority policy issues:

1. Make timely information on health care cost and quality more available so that employers and their employees can understand and use the information.
2. Repeal the Cadillac Tax.
3. Enable employers to offer HSAs in addition to value-based benefit design components, such as free access to onsite clinics, and co-pay and deductible waivers for high-value care.
4. Clarify wellness rules.
5. Maintain momentum of value-based payment policies.

We urge Congress and the Department of Health and Human Services (DHHS) to continue to pursue aggressive reforms that make it easier for Alliance member employers, and their employees and families, to understand the full picture of health care cost and quality, provide high-value primary care in convenient settings and adopt value-based benefit designs and payment strategies.

Read the full testimony here.