As the largest payer of health insurance in the U.S., self-insured employers have the power to drive—or stall—payment reform, according to a pair of health policy analysts.
Employer-sponsored health insurance pays for about a third of national health expenditures, and self-insured employers comprise the majority (60%) of that third. But few self-insured employers participate in alternative payment models (APMs), payment systems that reward the provision of cheaper, higher-quality services, and sometimes penalize waste and inefficiency.
“The business case for health plans to implement APMs is far from clear,” Robert E. Mechanic, a senior fellow at the Heller School of Social Policy and Management at Brandeis University and Robert S. Galvin, M.D., CEO of Equity Healthcare wrote in a commentary for the New England Journal of Medicine (NEJM).
On the contrary, there are several barriers. Primarily, their biggest customers—employers—are reluctant to pay providers bonuses for prioritizing value over volume. Instead, employers need to be persuaded APMs are worth the investment.
“I think what employers are looking for is evidence that this works really well,” Mechanic said. But "there’s not an overwhelming amount of evidence saying that [APMs work].”
However, Mechanic said he is “optimistic that evidence will build.”
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The authors point to the healthcare venture between Amazon, JP Morgan, and Berkshire Hathaway that could set an example, particularly since Amazon “is known for its willingness to invest in long-term strategies.”
Employers can also look to Medicare for some evidence, where APMs have generated “not only savings, but…shared savings payments” over the last eight years, Mechanic added.
Mechanic said the NEJM commentary serves as a call to action for employers to realize and wield the power they have.
“It’s important for the private sector to step up and be more active,” he said. “Employers are a major economic force in this country, and I think they have to get engaged with both controlling spending and lending their weight to trying to change the delivery system.”