Health Policy Platform

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The quality and cost of healthcare varies significantly in ways that matter to people’s health and financial well-being. Information with which to compare the cost and quality of healthcare outcomes is essential to creating a consumer-centered, high-value healthcare system.

• Consumers need information with which to compare and choose health plans, providers (including physicians), and treatment options.
• Employers need information in order to align financial incentives for consumers to select high-value providers and treatment options and to structure reimbursement models that reward high-value providers.

Moreover when cost and quality information are made public, providers respond by improving care at far greater rates than when information is unavailable or is shared only on a private basis.

As public policy makers, insurers and providers seek ways to respond to demands for greater transparency of information, we ask that they keep the following considerations in mind.

1. There is no correlation between cost and quality in healthcare. High-cost providers do not necessarily deliver the best outcomes, nor do low-cost providers deliver poor care. Ideally, information about cost and quality should be presented together so that employers and consumers can make decisions based on value. However, information on both factors is not always simultaneously available.

• When information demonstrating differences in quality is available without accompanying information about cost, it should be published, given the risks associated with poor-quality care.
• When information about cost is available without accompanying information about quality, it should be presented with clear messages about the lack of correlation between cost and quality.

2. Information should be presented to allow for side-by-side comparisons of hospitals and physicians based upon a standard unit of analysis.

3. Quality information should:

• Reflect the outcomes of care that matter to consumers (mortality, complications, readmissions, infection rates, etc.).
• Accurately reflect performance – measures should be constructed and/or audited in such a way that minimizes misunderstanding or variation in data collection. Self-reported data should be subject to an independent audit or other means to ensure accuracy and reliability.
• The results of the audit should be published along with guidelines about their interpretation and use, akin to the process used to verify the financial performance of 401(k) plans and the financial and quality performance of private sector businesses.
• Demonstrate variations in care and be used to assess better and worse performance; however, information that reflects no differences may still be helpful to alert the public about performance that needs to be improved across all providers or to reassure the public about performance that is of uniformly high quality.

4. Information about costs should include total cost (employer plus employee portion) as well as employee out-of-pocket costs.

• It’s imperative for consumers to know the total cost so that they can both appreciate their health benefits and help manage/preserve it through appropriate use driven by informed decision-making.

5. Voluntary initiatives should be given a time-limited opportunity to prove that they can meet the information needs of consumers and employers.

• If voluntary initiatives fail to deliver in terms of provider participation, content, or timeliness, legislative mandates should be pursued.

6. Those who are being measured and reported on should have input into the initiative, and the methodology by which assessments are made must be transparent.

7. State data assets like the Wisconsin Health Information Organization (WHIO) and the statewide hospital discharge dataset currently maintained by the Wisconsin Hospital Association Information Center (WHAIC) should be continually improved to deliver the most value to Wisconsin residents and consumers from other states that use Wisconsin healthcare facilities.

The Alliance urges healthcare decision-makers in both the public and private sectors to adhere to these requirements when designing initiatives to address the need for cost and quality transparency.

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Insurers, employers, and patients all depend upon an affordable healthcare system in order to cover the cost of the care needed to maintain a healthy workforce. It is common knowledge that America’s healthcare costs are on the rise, with prescription drugs being one of the major contributing factors to annual increases in healthcare expenditures. The rising cost of drugs affects a company’s bottom line, and the unpredictability of drug pricing makes it difficult for employers, particularly those who self-insure, to plan for their health care costs.

Employers are limited in their options to manage rising drug prices, as they want to ensure their employees and dependents have access to crucial medications and don’t want to put employees in the position of pricing essential medications out of reach. Additionally, for some conditions, appropriate pharmacotherapy may help avoid more expensive or risky medical interventions.

There are many contributing factors to the increases in drug prices:

• Demand inelasticity. Because drugs can be life-altering or lifesaving, consumers don’t have the option to walk away from high prices. Furthermore, Americans are living longer, with more chronic illnesses, requiring more use of medicine to treat seniors, driving up demand.
• Negotiating power. The federal government, which purchases one-third of all prescription drugs sold in the United States through the Medicare and Medicaid programs, does not use this high-volume purchasing power to negotiate lower rates, nor do these programs consistently require members to use generic drugs when they are available.
• Supply chain. Prescription drug supply chains are complex and include pharmaceutical manufacturers, wholesale distributors, retail stores, mail-order distributors, and specialty pharmacies. All of these entities take a cut of the drug price, which is passed on to the consumer.
• Extended patents. United States patent law allows manufacturers to block competition for an extended period. The Food and Drug Administration (FDA) typically approves patents on medications for up to seven years for chemical-based medications and even longer for more complex biologic drugs. Once patents expire, manufacturers are able to use litigation or minor changes to a drug’s composition to delay competitors’ entry into the market. A recent study revealed that exclusive brand name drugs account for 72 percent of drug spending but only 10 percent of the prescription drugs dispensed.

The Alliance supports the Five Rights framework adopted by the National Alliance of Healthcare Purchasing Organizations. Although this framework was designed specifically to address rising specialty drug costs, The Alliance supports these principles across the board in efforts to address rising pharmaceutical costs:

1. Right Drug – prescribing decisions should be guided by the best available evidence on drug safety and efficacy, and testing to assess the best drug for a patient should be covered.
2. Right Price – costs along the pharmacy supply chain should be transparent to purchasers and patients alike.
3. Right Place – there should be parity in charges across settings of care.
4. Right Data – purchasers should be engaged with providers, regulators, and drug manufacturers to ensure that purchasing decisions are informed by meaningful data analysis.
5. Right Support – patients should be supported to ensure follow-through with prescription drug therapies.
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Guided by the Five Rights, The Alliance encourages state and federal policymakers to adopt the recommendations of the National Academy of Sciences report, “Making Medicine Affordable: A National Imperative.” The report identifies several policies that policymakers can adopt to directly impact this national dilemma, including:

• Use the clout and purchasing power of the government to negotiate lower prices with manufacturers.
• Require greater transparency regarding how drug prices are set.
• Incorporate value-based principles into drug formularies.
• Limit direct marketing of prescription drugs to consumers.
• Limit the total annual out-of-pocket costs paid by Medicare enrollees.
• Evaluate opportunities along the pharmacy supply chain to increase value.
• Share information with consumers regarding pharmaceutical effectiveness and value.
• The Federal Trade Commission (FTC) should use the drug pricing formulas to “identify and act upon any anti-competitive practices.”
• Federal and state governments should work to control rising drug prices while at the same time ensuring that any cost savings realized as a result of these actions are not shifted to employers and other private-sector healthcare purchasers.

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The Alliance believes the Wisconsin Health Information Organization (WHIO) is a game-changing asset that deserves the support of all stakeholders, including Wisconsin lawmakers and the state and federal government. Wisconsin payors, providers, and purchasers have developed a data asset in WHIO that will significantly advance our ability to measure and improve healthcare value.

WHIO would benefit from having additional data contributors, including private and public sector purchasers (e.g., Medicare), pharmacy benefit managers, and third-party administrators. WHIO provides a strong foundation for the public-private sector alignment around market incentives to improve healthcare value and for providers themselves to identify where improvements in quality and efficiency are needed. The more robust the data, the more transformative the impact becomes.

While Wisconsin has made advances in the area of transparency through both public and private sector initiatives, there is still a long way to go toward realizing the goal of providing consumers with the information they need to compare and choose providers and hospitals. Involving employers and consumers in the design of transparency initiatives will help to ensure a more effective and user-friendly end product.

The Alliance encourages public and private sector champions of transparency to coordinate their efforts with WHIO rather than risk redundancy, inefficiency, and public confusion. We urge decision-makers to keep these considerations in mind as new ideas relating to cost and quality transparency emerge.  

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The Alliance believes that the transparency of healthcare costs, coupled with information about quality, are prerequisites to improving value in healthcare. Healthcare billing processes have a long way to go before they meet the standard of transparent, actionable information that is accessible to consumers.

Facility fees are one discrete and important place to start. A facility fee can be charged, in addition to the full price for an office visit, when the clinician providing the service does not own the building within which care is delivered. Based on our own analysis from The Alliance claims data, total billed charges are 78.7 percent higher when there is a facility fee compared to when there is not. What’s more, consumers often do not realize they have incurred a facility fee until the bill arrives. Facility fees not only add significantly to the total cost of a patient healthcare visit but also cause confusion for both employers and patients looking to make informed healthcare decisions.

The Alliance urges Wisconsin policymakers to enact legislation or promulgate regulations that would require providers to notify consumers of applicable facility fees at the time the appointment is made. We believe the disclosure should include a good-faith estimate of the fee to enable consumers to assess the total cost-benefit of using a facility that charges facility fees. 

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Background:

The prices negotiated between hospitals and health plans or networks are commonly regarded as proprietary information. Contract language between hospitals and health plans or networks typically prohibits sharing this information. Even so, The Alliance has always maintained the right to share negotiated prices with our member employers and their employees. This, however, is different than making negotiated prices public.

Generally speaking, providers and insurers or networks are opposed to any disclosure of negotiated prices.

• Insurers and networks argue that disclosing allowed amounts will increase prices as providers, who discover that their reimbursement rates are low, will insist on rates that are on par with higher priced providers. They are also concerned that public disclosure of contracted rates will lead to greater price uniformity in the market, removing a source of competitive advantage.
• Providers argue that disclosing allowed amounts will lead to lower reimbursement rates as insurers discover that their competitors have more favorable contract pricing and insist on lower rates. They argue that operating margins are already thin for many providers and that reduced reimbursement rates will force hospitals to close, doctors to stop practicing, etc.

Meanwhile, employers and their employees face significant challenges in making informed decisions in their roles as purchasers and consumers of healthcare. Employers lack solid information to compare the performance of their network options, and consumers face significant obstacles to understanding, in advance, what they will be required to pay for services.

Resolution:

The Alliance, as an employer-owned cooperative that manages a network of doctors and hospitals, supports well-designed and specified transparency of negotiated prices.

We believe that transparency of negotiated prices supports the following goals:

1. Employer fiduciary duty – Employers, as plan fiduciaries, have an obligation to ensure they are paying a fair price. Making prices public supports employers in this role.

• Information on price and quality is key to the value-based selection of health plans, networks, and providers. It is also essential to create benefit plan designs that encourage consumers to use providers that deliver good care at lower prices.

2. Public accountability – Transparency of information will shine a light on high prices and irrational price variation, creating public pressure and accountability that has been shown to drive change.
3. Information for markets to work – We have a market-based healthcare system; information to compare price and quality are prerequisites for markets to work so that providers who deliver the best quality at the lowest price see the benefit of greater market share.

Design Considerations:

Whether transparency occurs through a legislative mandate or through an organic groundswell of voluntary disclosure, there are some important considerations to ensure a positive effect and to avoid unintended consequences.

1. “Price” should be well-defined/specified to ensure consistency and comparability across plans/networks and providers and to avoid gaming.

• Clear and auditable specifications should be set (e.g. negotiated prices before the impact of benefit plan design, claim edits, or other post-hoc mechanisms)
• Measures of total cost or bundled prices should also be reported to create a more complete picture.

2. Transparency of negotiated prices should be coupled with meaningful information to compare quality of care/outcomes.

• Price is important, but so too is quality of care. And in healthcare, price is not correlated with quality – high-priced providers do not necessarily deliver the best care.

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All participants in the healthcare delivery and payment system – providers, employer purchasers, government purchasers and payors, commercial payors, and consumers – need robust data on cost and quality in order to make purchasing, contracting, and care decisions that will lead to the best outcomes and highest-value care.

At the federal level, we believe that raw Medicare data should be available to employer organizations like The Alliance so that we can use it to supplement other data when evaluating healthcare providers.

At the state level, healthcare data collection and sharing, whether related to Medicaid, state employees, or healthcare providers as a whole, should be consistent. States should expand or modify their efforts to collect and make publicly available data on healthcare cost and quality with an eye toward what is relevant to purchasers and consumers. The timing, specific measures, and format of publicly available data should be designed with the input of employer purchasers and consumers. While The Alliance is generally supportive of voluntary efforts to improve healthcare value, voluntary quality and cost reporting frameworks often leave gaps in information that make the data much less actionable. Where complete, actionable data cannot be gathered through voluntary reporting, policymakers may need to consider reporting mandates.

Wisconsin has advanced farther than Illinois in making information available to help providers understand performance and to help purchasers make informed decisions. The State of Wisconsin collects a set of data through a private contract with the Wisconsin Hospital Association Information Center (WHAIC) that The Alliance uses in its quality-reporting initiatives. However, the data set has some limitations, especially regarding analyzing avoidable complications. Some Wisconsin Health Information Organization (WHIO) data is also now available to consumers through MyHealthWI.org, but this resource would be made more comprehensive through the addition of more complete data on cost and quality.

The Alliance resolves to work with all of our government partners so that timely, actionable information on healthcare quality and the cost is collected and shared for the benefit and use of all healthcare system participants. Federal and state governments should move forward to make robust healthcare data available so that purchasers, providers, payors, and consumers can work together to promote higher-value care.

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According to the National Academy of Sciences, rates of opioid use disorder and deaths attributable to opioid use have both risen much faster in the United States over the past two decades than in other countries. Opioid misuse has led to tens of thousands of untimely deaths, with more than 90 Americans dying every day from opioid overdose. The breadth and depth of this epidemic have generated important conversations among federal and state policymakers and stakeholders across all sectors of society about the need to dramatically reduce the prescribing of opioids and increase the availability of substance use disorder treatment.

From the employer perspective, opioid misuse and other substance use disorders contribute significantly to absenteeism, lost productivity at work and workplace accidents. In addition, employees who overuse or become addicted to opioid medications experience healthcare costs that may be as much as twice that of a typical employee.

While rates of non-medical use of opioids are rising, it remains the case that opioid addiction, misuse, and overdose most commonly begin with a prescription for opioid painkillers. The Alliance supports policies that align the regulation of all prescribers, including physicians, advanced practice nurses, dentists, and veterinarians, with emerging evidence on the safe and effective use of medicines that control pain. The Alliance also recognizes that providers need timely access to information on opioid prescriptions in light of the rapidly shifting landscape of prescription opioid abuse.

The Alliance calls on policymakers to adopt policies to control opioid misuse, including requiring compliance with the latest federal and state opioid prescribing guidelines and requiring compliance with prescription drug monitoring programs. The Alliance supports mechanisms to hold prescribers and pharmacies accountable if they fail to comply with these guidelines and programs.

The Alliance also encourages federal and state policymakers and regulators to adopt policies that facilitate information sharing among prescribers and pharmacies so that opioid prescribing patterns and any inappropriate drug seeking by consumers can be more easily monitored.

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Recent studies indicate that the use of telemedicine and telehealth services by employers is on the rise. As more healthcare services become available through remote communications and technologies, employers will determine whether to offer these services as part of their employees’ benefit offerings.

The Alliance recognizes that telemedicine and telehealth technology use represent a growing sector of the healthcare industry. The use of telemedicine and telehealth services can provide cost savings to employers and increase access to healthcare for employees. Beyond cost savings, employers also look to these services to improve employee productivity and reduce absenteeism. Telemedicine and telehealth are particularly important to ensure timely access to needed healthcare services in rural or underserved communities and to address significant access challenges that occur in psychiatry and other behavioral health services.

The Alliance supports efforts to work collaboratively with purchasers, providers, and regulators to advance access and use of telemedicine and telehealth services while recognizing the need for consistent telehealth policies across the states that do not create unnecessary barriers to healthcare services.

The Alliance members believe consistent state rules and broad definitions of these services and technologies are important to their ability to offer these services as a benefit to their employees. The Alliance urges state regulators, medical boards, legislatures, and others to adopt telemedicine and telehealth policies that will enhance the availability and effectiveness of these services and control their costs.

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Behavioral health conditions, including depression, anxiety, problematic alcohol consumption, prescription and illicit drug misuse, obesity, and smoking, are extremely common in the working-age population and are very costly for employers. Obesity and tobacco use are the leading preventable causes of death. Problematic alcohol and drug use are major contributors to accidents, lost work time, medical expenses, and premature death.

There is growing evidence that regular screening for these common conditions in healthcare settings, paired with brief interventions, together lead to reductions in risky behaviors and corresponding reductions in medical expenses.

The Alliance supports public policies at the federal and state level that promote widespread adoption of brief screening and intervention by making data on screening, brief intervention, and referral to treatment (SBIRT) services publicly available, including SBIRT in publicly sponsored health benefit design and providing adequate reimbursement for SBIRT services.

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More than half of all Americans live with chronic pain. More than 40 percent of Americans report that chronic pain interferes with life activities, including their ability to work. Employees experiencing chronic pain are more frequently absent from work and are less productive when in the workplace. Chronic pain and the overuse of prescription painkillers both increase costs for employers. While management of chronic pain is essential, overuse or improper use of prescription painkillers generates substantial costs for employers due to absenteeism, reduced productivity, and unnecessary healthcare expenditures.

The efforts of The Alliance and its employer-members will be amplified and made more effective if public sector employers and public sector healthcare purchasers adopt approaches to the management of chronic pain that are consistent with the best available evidence. Recent studies have highlighted a variety of effective alternative approaches to managing chronic pain, including:

• Non-opioid pharmacotherapy
• Physical therapy
• Prescribed therapeutic exercise programs
• Nutrition
• Acupuncture
• Chiropractic care
• Therapeutic massage
• Counseling and psychotherapy

The Alliance urges state and federal policymakers to include coverage for evidence-based alternative pain management therapies in state and federal health benefit programs, including state Medicaid programs, state employee health benefit programs, the Medicare program, and under the Affordable Care Act’s regulatory framework. Support for these approaches should include coverage in benefit plan designs, reimbursement, and transparent reporting of relevant quality and cost metrics.

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The American healthcare system relies upon principles of free market competition and consumer choice among competitors to drive improvements in quality and value. There are relatively few market-based mechanisms in place to provide any meaningful check on new construction, new service offerings or organizational mergers in healthcare. Employer purchasers are rarely, if ever, consulted when new healthcare infrastructure, service offerings, or consolidations are being planned.

Recent data suggest that markets are becoming increasingly concentrated, with fewer large players controlling more market share. Health services researchers have found that highly concentrated healthcare markets result in higher prices for healthcare services. While researchers have also found that concentration among insurers can help to hold provider price increases in check, there is no market-based mechanism to ensure that any such “savings” translate to lower healthcare costs for employers and employees.

Provider organizations assert that consolidations and mergers are necessary to provide better quality care, particularly when it comes to managing complicated health conditions or performing sophisticated procedures. Providers also cite the need to better manage entire populations of patients as a reason for mergers.

The Alliance is committed to healthcare value – high-quality, safe care that is accessible to consumers and is provided at an affordable price. The Alliance understands that employers must participate meaningfully as informed purchasers in the healthcare marketplace while also supporting their employees in seeking out high-value care.

The Alliance urges policymakers and public sector healthcare purchasers to evaluate healthcare provider acquisitions and expansions based on a full consideration of current and anticipated population trends, availability of comparable healthcare services within a reasonable distance, and the best interests of all aspects of the healthcare delivery system. Government entities that regulate or purchase healthcare services should seek the perspectives of employers and other purchasers regarding the impact of new construction, facility expansions, and provider system mergers.

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Wisconsin has been a national leader when it comes to worker’s compensation, as it was the first state in the nation to approve a workers’ compensation law in 1911. Wisconsin’s workers’ compensation program differs in some important ways from programs in neighboring states. Wisconsin has not adopted medical cost containment measures in its worker’s compensation programs. In Wisconsin, most employers still pay billed charges for health services related to workers’ compensation. More than 40 other states, including Illinois, have adopted workers’ compensation fee schedules.

The Alliance has built its membership through the years by adhering to a set of principles that guide the way it contracts with health providers. One of those principles is that a fair price is a fair price for a health service. Once a price is agreed upon, it shouldn’t matter who is paying it or how it is being paid. As a result, most of The Alliance’s contracts stipulate that providers will accept the same reimbursement for workers’ compensation claims that they do for group health claims.

The Alliance resolves to work with Wisconsin policymakers and the Wisconsin Workers’ Compensation Advisory Council to ensure that common sense reforms are considered and enacted. As an advocate for employers and an organization that understands “market prices” for healthcare services, The Alliance can play an important role in helping policy makers understand what may constitute an acceptable solution for employers.