Evidence is growing that in more markets across the country, private sector
health plans and employers are facing “very high price increases year-to-year”
in some of the same markets where accountable care organizations have been
approved by Medicare, the chief executive officer of Equity Healthcare at the
Blackstone Group said Jan. 28.
Speaking at a briefing sponsored by the Alliance for Health Reform, Robert
Galvin said that coordinating health care among providers, which is needed to
create new payment reform, is leading to consolidation. “But where appropriate
consolidation becomes too much consolidation, it becomes a problem,” he
Galvin is in charge of choosing health plans for about 40 companies. The
briefing was titled “Approaches to Bending the Health Care Cost Curve.”
Provider consolidation can result in large organizations that have
“tremendous pricing power,” which will lead to cost shifting from public sector
programs such as Medicare to private payers, such as employers and individual
health insurance customers, Galvin said. In addition, “Innovation starts to get
squeezed out,” he said. “Part of the worry when you get organizations that are
that large is that it's just hard to be heard.”
Galvin cited a study released in November 2012 by Catalyst for Payment
Reform, an organization sponsored by employers, health plans, consumers, and
labor groups to further payment reform. It found that consolidation among
hospitals and large health systems across the country is the major driver behind
rising health care costs (223 HCDR, 11/20/12).
Employers and consumers need more information on health care prices and
quality, and Galvin called for measuring the results of global payment, bundled
payment, and other new payment reform plans. “There is no kind of neutral party
that is today authorized to measure what is actually going on,” he said.
Galvin also called for funding antitrust regulation. “This has to be a whole
system solution. It can't be that one sector does better and the other does
worse, because real improvement is going to come when health care is more
affordable and better quality for everyone,” he said.
Karen Ignagni, president and chief executive officer of America's Health
Insurance Plans (AHIP), said that “we need to clear the barriers that are
standing in the way” of health care cost reduction.
“In the private sector, we're doing tiering,” forming partnerships with
high-performing networks of physicians and hospitals in which consumers receive
incentives to use those networks. “There's some significant results to report,”
But the industry is not able to set up tiered networks in Medicare Advantage,
the private sector segment of Medicare, she said. That is “a barrier to actually
achieving the kinds of things we're doing in the commercial arena that could be
In addition, there are barriers to sharing information with consumers,
Ignagni said. “In some cases, health plans are forced to sign contracts … with
providers where they can't share information,” she said. “To the extent we can't
share information … those barriers should be broken and eroded.”
Ignagni also called for allowing health insurers to adopt wellness incentives
for enrollees in individual plans. “We're working and partnering with employers
to encourage participation in wellness programs, rewarding people for doing so,
but we're not able to do that on the individual side,” she said.
“With so many people purchasing on their own, that's something that ought to
be looked at,” she said. A demonstration wellness program will be conducted in
10 states in the individual market, “but we ought to think more broadly about
how to encourage individuals to participate in disease management and get
rewarded for health risk appraisals and following the specific guidelines of
their physicians,” she said.
AHIP, which represents health plans covering about 200 million Americans,
called for extending wellness programs in the individual market in a comment letter it filed with the
Department of Labor Jan. 25 on a proposed rule released last November governing
wellness programs in group health plans (224 HCDR, 11/21/12).
Ignagni told the briefing there needs to be more focus on out-of-network
charges, which are higher than charges for care obtained within health plan
networks. “To an individual, if they're seeking care out-of-network, it matters
to them if a particular physician is charging 10 times Medicare [rates],” she
AHIP is finishing a study highlighting price differences between in-network
and out-of-network charges, Ignagni said. “The results are eye-popping in terms
of out-of-network charges.”
Total costs need to be contained “to make sure that we are not designing
strategies that yield reductions on one side that create cost shifting on
another,” Ignagni said.
Stu Guterman, vice president and executive director of the Commonwealth
Fund's Commission on a High Performance Health System, highlighted a study
released Jan. 10 that maintained that health care costs could be reduced by some
$2 trillion from 2013 through 2023 by adopting a series of measures, foremost of
which would be adopting a nationwide health care spending target, patterned
after a health care cost containment law adopted in 2012 in Massachusetts for
controlling state spending (08 HCDR, 1/11/13).
He said a total health spending target should be based on gross domestic
product growth. “The United States spends much more money on health care than
any other country in the world,” he said. “Holding health spending to GDP growth
ought to be a legitimate target, set nationwide, not just [for the] federal
That would be a “motivating force” for the health care industry and would
include implementing provider payment reforms, providing consumers with more
information and rewarding them for making better choices, and making markets
work better to create better health at lower cost, he said.
By Sara Hansard
AHIP's comment letter on the wellness incentive proposed rule is at http://op.bna.com/hl.nsf/r?Open=shad-94dsh2.
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