Proposed Health Policy Resolutions
Plank 1: Cost and Quality Transparency
Resolution 1.02: Promote Fair Prices for Prescription Drugs to Ensure Appropriate Care and Predictable Health Care Expenses
Insurers, employers and patients all depend upon an affordable health care system in order to cover the cost of the care needed to maintain a healthy workforce. It is common knowledge that America’s health care costs are on the rise, with prescription drugs being one of the major contributing factors to annual increases in health care 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 illness, 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 the pharmaceutical manufacturer, 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 Health Care 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:
- 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.
- Right Price – costs along the pharmacy supply chain should be transparent to purchasers and patients alike.
- Right Place – there should be parity in charges across settings of care.
- Right Data – purchasers should be engaged with providers, regulators and drug manufacturers to ensure that purchasing decisions are informed by meaningful data analysis.
- Right Support – patients should be supported to ensure follow-through with prescription drug therapies.
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 health care purchasers.
Plank 2: Aligning Incentives For Providers
Resolution 2.01: Promote Health Care Value Through Robust, Transparent Data
All participants in the health care delivery and payment system – providers, employer purchasers, government purchasers and payers, commercial payers 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 health care providers.
At the state level, health care data collection and sharing, whether related to Medicaid, state employees or health care providers as a whole, should be consistent. States should expand or modify their efforts to collect and make publicly available data on health care 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 health care 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 health care quality and cost is collected and shared for the benefit and use of all health care system participants. Federal and state governments should move forward to make robust health care data available so that purchasers, providers, payers and consumers can work together to promote higher value care.
Resolution 2.02: Promote Policies that Reduce Opioid Misuse and Addiction
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 health care 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, advance practice nurses, dentists and veterinarians with emerging evidence on 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.
Plank 3: Supporting Consumers
Resolution 3.01: Promote Telemedicine
Recent studies indicate that the use of telemedicine and telehealth services by employers is on the rise. As more health care services become available through remote communications and technologies, employers will determine whether to offer these services as part of their employees’ benefit offering.
The Alliance recognizes that telemedicine and telehealth technology use represents a growing sector of the health care industry. The use of telemedicine and telehealth services can provide cost savings to employers and increased access to health care 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 health care 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 health care services.
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 polices that will enhance the availability and effectiveness of these services and control their cost.
Resolution 3.02: Promote Behavioral Screening and Intervention
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 health care 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 through 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.
Resolution 3.03: Promote Evidence-Based Pain Management Strategies
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 health care expenditures.
The efforts of The Alliance and its members will be amplified and made more effective if public sector employers and public sector health care 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
- 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.
Plank 4: The Health Care Marketplace
Resolution 4.01: Ensure That Health Care Acquisitions and Service Expansions Promote Value
The American health care 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 health care. Employer purchasers are rarely, if ever, consulted when new health care 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 health care markets result in higher prices for health care 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 health care 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 health care 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 health care marketplace, while also supporting their employees in seeking out high-value care.
The Alliance urges policymakers and public sector health care purchasers to evaluate health care provider acquisitions and expansions based on a full consideration of current and anticipated population trends, availability of comparable health care services within a reasonable distance and the best interests of all aspects of the health care delivery system. Government entities that regulate or purchase health care services should seek the perspectives of employers and other purchasers regarding the impact of new construction, facility expansions and provider system mergers.
Resolution 4.02: Reform Workers' Compensation
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 Alliance contracts stipulate that providers will accept the same reimbursement for a 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 health care services, The Alliance can play an important role in helping policy makers understand what may constitute an acceptable solution for employers.