Self-insured employers will have to dig into the details of the health plans they offer their employees more so than they ever had to before thanks to provisions in the Consolidated Appropriations Act (CAA) that will go into effect in 2023.
These employers will now need to be fiduciaries of the healthcare plans they offer. Of course, at least on paper, self-insured employers have been fiduciaries of their healthcare benefits since the passage of the Employee Retirement Income Security Act in 1974, but the CAA means that they’ll have more data to work with and therefore more responsibility that their workers get the best coverage for a reasonable price.
“Employers have always needed to be the fiduciary for their plans and make sure they’re running them well,” Tim Stawicki, chief actuary for North America health and benefits at Willis Towers Watson, told Fierce Healthcare. “But for a variety of reasons, they haven’t been able to. Much of the data was sort of locked away with their vendors or with the providers.”
Garrett Hohimer, vice president of policy and advocacy for the Business Group on Health, a not-for-profit organization that advises large employers about healthcare benefits, told Fierce Healthcare that the bulk of the CAA’s requirements “seek to make more financial information available, so that plans and patients can better understand costs and make better-informed decisions. However, the CAA itself does not further direct how plan fiduciaries will use the information, including in terms of negotiating with providers and hospitals. Narrowly, fiduciaries may wish to consider how the CAA’s ‘covered service provider’ compensation disclosures could inform generally applicable ERISA principles tied to ensuring those vendors are paid reasonable compensation.”
The expanded fiduciary duties hinge on transparency, something the Centers for Medicare & Medicaid Services (CMS) sought to provide when it mandated that insurers release data on what they charge employers and providers for covered services in July. But so much data were released that even computer experts struggled to make sense of them.
Stawicki said it was in the petabytes, and a petabyte is equal to 1,000 terabytes. In other words: “It’s huge,” said Stawicki.
The insurer data were not meant to be used by consumers—those data are expected to be released in the summer of 2023—and CMS encouraged intermediary computer experts to jump in and interpret the information for everybody else, including hospitals, physicians, PBMs and consultancies, saying that the situation would “offer third-party developers and innovators the ability to create private sector solutions to help drive additional price comparison and consumerism in the healthcare market.”
Kosali Simon, Ph.D., is a nationally known healthcare economist at Indiana University. She’s generally considered to be the expert who’s taken the deepest dive into the insurance industry data. She told Fierce Healthcare in September that “when we talk to people who have amazing capabilities at data processing, they’ll say: ‘OK, we know how to open one or two of these files. But to open all of these and make insights? That is pretty close to impossible.’”
That was September. Stawicki said he sees signs of progress in interpreting the data.
“There are some vendors that have come into the market who are trying to take this data in, ingest it and make it more usable and readable and available to employers, consultancies, researchers and the like,” he said.
Hospitals were supposed to release their data in 2021, but many didn’t comply, complaining that the effort would be too burdensome, especially during the COVID-19 pandemic.
Elizabeth Mitchell doesn’t buy that argument. Mitchell is president and CEO of the Purchaser Business Group on Health (PBGH), which consists of about 40 large private and public employers who spend about $350 billion a year to cover 21 million Americans.
“I think the hospital transparency question was more a question of leadership,” Mitchell told Fierce Healthcare. “Because there were several hospitals—Sutter Health, actually, being exemplary among them—that did meet the requirements in the middle of a pandemic under the same constraints as others. Yes, there’s a lot on everybody’s plate right now. But we’re not seeing what I believe is adequate responsiveness to the hospital transparency requirements.”
Mitchell said that self-insured employers, at least those in PBGH, are prepared to take on the fiduciary challenges required by the CAA. But as the data problems with both insurers and hospitals illustrate, other stakeholders must also be ready to make it work.
“I think the health plans were compliant,” Mitchell said. “That doesn’t mean that they made anything easy to use. I think you’re going to see sort of a cottage industry pop up around making those data more structured and usable. And we are actively exploring how to do that for our members. Because the information is potentially game-changing. Once you see the wild variation in pricing, it really raises questions.”
Hohimer said that although the CAA doesn’t mandate that quality information be shared, many health plans have integrated quality related data in with cost estimates. “The Business Group on Health and other stakeholders continue to engage on appropriate standards for quality, which may be appropriate to adopt as a ‘requirement’ for plans,” he said.
The CAA prohibits gag clauses in contracts between self-funded employers and healthcare providers, third-party administrators, consultants and other entities that historically made transparency impossible. With those gag clauses out of the way, Stawicki said employers “will be ensuring that they are looking into the data, understanding what’s available, and making sure they’re driving the best results for their members and for their plan.”
Mitchell said she’s “quite certain it won’t be easy. That is no one’s expectation. However, insurers really don’t have huge incentives to negotiate all that effectively. Whereas self-insured employers are paying the bills. It is their money. I think there is a different urgency and a different set of incentives to do this.”
She added that “it’s really not about blame. It’s really about just doing something that works.”
For example, PBGH recently issued a request for information to begin contracting directly with primary care practices that the organization hopes will enable members to have access to lower cost medications. PBGH’s members, she said, are essentially saying that “‘if the industry won’t do this, then we will help them do it.’ Because they must address these needs on behalf of their employees.”
Stawicki said one of the challenges with the hospital data was that the government didn’t provide a template for how the information should be dispersed. Many hospital systems simply used their own formats that didn’t really match each other.
Mitchell said that “as the hospital pricing data becomes available, and the health plan negotiated rates become available, and then ultimately, the PBM rates, and also the payment arrangements for consultants—which all have been extremely opaque at best—that’s going to have a significant impact on the market, on the relationships, on the understanding of who is doing what for whom.”
Her employer members particularly want to take on what Mitchell called the “absolute abyss of administrative waste in PBMs.”
And Mitchell said she expects lawsuits to result from the CAA when it’s discovered just how poorly some health plans or third-party administrators had been bargaining for their employer clients. “They’re coming,” she said. “Because they were supposed to be negotiating effectively on behalf of their customers. And I think there’s going to be increasing evidence that that didn’t always happen.”
Lawsuits have already been filed, said Stawicki, citing a complaint (PDF) filed in early December by self-funded employers against Anthem, in which the employers charge that the health plan allegedly denied them access to claims data.
“I don’t want to comment on pending lawsuits,” Stawicki said. “But that’s an example of something that may come out of this. Additional lawsuits as the data are more available and become easier to understand.”
For consultants, transparency will mean exposing conflicts of interest. Health plans that they may have been pushing on employers might have been paying the consulting companies to do just that.
“Everyone can make money,” said Mitchell. “That’s fine. But I don’t believe it was fully understood that there were often conflicts of interest, when the information was assumed to be independent and in the employer’s best interest. I think that is going to create some questions.”
There will also be more paperwork. For example, the CAA mandates that self-insured employers must provide a written analysis upon request from certain state and federal agencies that details how its benefits package complies with the Mental Health Parity and Addiction Equity Act.
Employers aren’t concerned about paying for mental health benefits, said Mitchell. They’re concerned about the mental health system. “It’s deeply dysfunctional,” said Mitchell. “The big problem is that there are too few mental health providers.”
PBGH has been asking health plans how they’re paying for mental healthcare that’s integrated into primary care. “There is not adequate payment to primary care practices to integrate behavioral health,” Mitchell said.
One thing the CAA does not clarify concerns a provision in the Affordable Care Act that says employee health plans cannot exclude providers practicing within their scope of license. This might mean, for example, that limitations on coverage by midwives could be lifted. Most insurers and employers who self-fund insurance currently do not provide coverage for home births, and the American College of Obstetricians and Gynecologists says that the safest places to give birth are at hospitals or accredited birth centers.
“I’m well aware that the advocacy organizations for certain clinicians try to protect scope of practice,” said Mitchell. “We all know that. But we have a terrible problem in this country with maternal health outcomes and inequity. And I would like to hear what their solutions for that is, rather than them saying other people shouldn’t help.”
Pregnancy-related deaths soared nearly 80% since 2018, driven by COVID-19 and disproportionately affecting Black and Hispanic women, according to a report (PDF) from the Government Accountability Office.
Mitchell said PBGH believes “there are opportunities for expanded scope of practice for different members of the team for different modes of care, like in the home, in the community. And we really need to be thinking much more creatively about how to meet the needs of moms and babies and less about protecting scopes of practice.”
Mitchell added that “not only are there economic new pressures, but now they have the fiduciary obligation to effectively use the newly transparent data, so I would not expect the status quo to be acceptable. And I think you’re going to see some pretty uncomfortable changes.”