By Sabrina Corlette, Karen Davenport, and Emma Walsh-Alker
The excessive and rising value of well being care is decreasing individuals’s entry to vital companies, suppressing staff’ revenue, and decreasing enterprise competitiveness. Many state worker well being plans (SEHPs) are the biggest business 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 concerning plan choices and states’ value containment methods. On June 28, 2023, we launched an replace on these plans’ progress within the final two years, in addition to the impression of latest federal coverage modifications.
In the 2 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. But these good occasions for SEHP directors is not going to final without end and SEHPs, like different payers, count on prices to extend. SEHPs are additionally topic to new federal necessities selling larger transparency of well being care transactions beneath the Consolidated Appropriations Act of 2021 (CAA) and protections for lined staff from sudden out-of-network billing beneath the No Surprises Act (NSA).
In a survey of fifty SEHP directors and comply with up interviews in 11 states, we discovered about states’ challenges and successes implementing a variety of value containment methods. While solely a handful of SEHPs report having the ability to quantify the financial savings generated by any of those methods, a number of initiatives emerged as promising candidates for value financial savings. Below are some key findings from our research:
Spaghetti on the Wall: SEHPs Try Multiple Strategies to Constrain Cost Growth
As they did in 2021, SEHPs report that prescription drug and hospital costs are the highest drivers of value progress for his or her plans. However, as in 2021, SEHPs’ methods stay primarily centered on prescription drug prices and enrollee utilization of companies, reasonably than hospital costs. Of the highest 5 value containment methods being pursued by states, just one (Centers of Excellence) has the potential to have an effect on hospital pricing. Although no single value containment technique surfacedas a magic bullet, promising efforts included reference pricing, tiered community plans, and multi-payer buying initiatives.
Accountability for Third-Party Vendors
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. While most SEHPs report that they rely solely on their TPA to barter with suppliers and handle plan networks, lower than half of states (21) report that they embrace value containment targets for TPAs throughout their procurement processes. Thirty-two SEHPs report that their TPA contracts embrace accountability mechanisms if their TPAs fail to curb value progress. However, in interviews a number of SEHP directors reported that they’re taking over 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 energetic resistance to value containment by their TPA distributors.
Data: More Availability however Limited Capacity to Use It
Since publication of our 2021 report, federal guidelines requiring plans and hospitals to publicly publish worth knowledge, in addition to a prohibition on gag clauses in provider-payer contracts, went into impact. SEHPs report that these coverage modifications have considerably improved their entry to claims and worth knowledge, however important boundaries constrain translating improved entry to knowledge into extra aggressive value containment methods.
Limited Attention to Limits on Surprise Billing
As plan sponsors, SEHPs are chargeable for implementing the federal No Surprises Act. However, 34 SEHPs reported not realizing, as of late 2022, whether or not any out-of-network suppliers had filed billing disputes in opposition to 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 value progress. However, extra SEHPs must systematically measure the impression of their value containment methods, with a view to assess what’s, or is just not, working. SEHP directors discover their analysis efforts hindered by challenges accessing and utilizing claims and pricing knowledge, and whereas they report a want to make use of this knowledge to tell community and plan design, they don’t seem to be but well-situated to take action.
Effective value containment methods for SEHPs require tradeoffs, and SEHPs should steadiness the competing calls for of stakeholders. Mitigating potential backlash typically entails injecting larger 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 value management efforts.
SEHP directors are bracing for rising costs and a tightening fiscal image. Identifying and increasing on value containment methods that successfully goal major value drivers, generate minimal “member friction,” and that don’t require appreciable administrative overhead is difficult for SEHPs. However, a number of SEHP directors are demonstrating that it’s doable to implement methods that maintain promise for decreasing supplier worth inflation whereas additionally minimizing stakeholder pushback.
Download the total report right here.
Access an interactive state map and downloadable knowledge tables right here.