Using transparency to aid health care costs, care quality and fiduciary requirements

No matter the size of the company, economic challenges and rising health care costs make it difficult for employers to offer affordable health care benefits that attract and retain employees. These challenges also create risks for a diverse workforce, where employees across income levels may struggle, leading to delayed health care services – often due to increased costs – underscoring the need for reasonably priced, high quality care offerings.

While no challenge this complex can be overcome with a single solution, price transparency is at the heart of meaningful change. From supporting employer efforts to better manage benefits costs to helping employees make more informed health care decisions, the additional insight of services cost compared to other options shifts the dynamic in ways our health care system has never seen before.

An evolving environment

While the shroud of price secrecy within the health care industry has made real transparency unattainable, recent developments are forcing change.

The Consolidated Appropriations Act, 2021, amended ERISA to require price and care quality transparency in employee health benefits plans. Much the same way employers have a fiduciary responsibility to provide well-researched 401(k) options for employees, employers must now do the same for health care benefits.

More recently, a class-action lawsuit was filed against pharmaceutical company Johnson & Johnson and its benefits committee for failing to meet ERISA fiduciary obligations in its selection of a pharmacy benefits manager and failing to negotiate more favorable pricing terms for plan participants. The complaint claims that this resulted in increased costs, harming participants and beneficiaries.

This case raises some important questions. First, does transparency really make a difference in managing costs and care quality/? And second, how can employers meet their fiduciary duty to provide the required transparency?

Employers are motivated

While some in the health care ecosystem are focused on fighting transparency requirements, many employers see it as an opportunity.

Benefits can be the difference between attracting and retaining the employees they need to grow and losing them to competitors. So, if price transparency provides insights that help them offer better benefits at a lower cost, many are all in.

Just as companies use data to shape business strategy or measure productivity, access to reliable health care data, advanced analytics and actuarial predictive models can help businesses find health care offerings that provide quality care at a reasonable cost. It also helps employers meet growing fiduciary requirements with a data-driven due diligence process.

Further, data can help identify gaps in care, uncover access challenges related to diversity, equity, inclusion and belonging, and advance benefits customization, which is a challenge when trying to satisfy the complex needs of five generations in the workforce.

How employers can benefit from price transparency data

Health care price transparency laws empower employers to compare publicly posted negotiated pricing across the universal health care landscape. This creates an opportunity to assess the cost of medical procedures in advance of care.

Employers can also analyze claims data to understand historical costs and use transparency pricing combined with actuarial analysis and advanced analytics to forecast benefits spending with greater accuracy. This empirical data provides a roadmap for determining more effective ways to reduce costs, improving care quality and minimizing disruption to members under their employer group health plan(s).

Organizations that invest time to develop a proactive value-based health care strategy and incentivize member usage of high-quality, low-cost providers see financial results. Early adopters leveraging publicly available pricing data from sites such as Healthcare Bluebook and Fair Market Health are realizing there are potential renewal savings depending on their strategy, incentives, and use of high-performance providers.

Making data actionable

While having access to the data is important, employers also must know how to process the data, extract actionable insights and meet fiduciary requirements.

Due to the volume of transparency data, employers need a wide toolkit of advanced data analytics tools to draw out actionable insights that support different needs and users. These strategic business intelligence tools support employers and advisors in creating the solutions that don’t just cost shift to participants. Instead, they benchmark providers, facilities, and carriers/payers to compare health care offerings against the best-negotiated plans in the country. High performing networks can be independently evaluated nationally, regionally, or locally in the same way.

In any business intelligence tool, employers should look for certain features, such as the ability to conduct network price comparisons by plans and issuers (payer) and assess health care provider quality performance. In addition, effective tools can enable the clinical and strategic evaluation of high-performing, low (reasonable) cost providers and an ability to build a solid foundation for fiduciary due diligence.

These tools are essential to ensuring price transparency works for employers and employees. Employers will be empowered to choose value-based care designs that align with the needs of their employees while complying with fiduciary requirements. Employees benefit from information that facilitates better decision making as well as opportunities to access higher quality care at a more affordable cost.

Cost containment through greater benefits participation and health care literacy

In truth, most employees don’t take full advantage of all the bells and whistles that come with their benefits. This results in employers and employees paying for benefits they never use.

With more transparency, the cost containment conversation can shift from cutting benefits to save money to how employers can develop a thoughtful, data-driven benefits offering that employees will utilize. Employers can use the data to identify what employees want and need, and then assess where there is value – quality and price – in the marketplace. The outcome is a more efficient benefits spend with a greater return, whether it’s enhanced employee wellbeing or improved competitiveness for the attraction and retention of top talent.

One significant opportunity centers on prescription drugs. With skyrocketing prescription drug prices, employers are often left with tough decisions. More data on utilization, together with a line of sight into alternatives and associated costs, helps employers and employees make informed choices that save money without compromising the quality care they need.

Related: Health care price transparency continues to be a conversation for House Committee

Another benefit is better health care literacy. The lack of health care cost transparency has too often led to ill-informed health care consumers who make poor health care decisions. More actionable data, complemented by support solutions, such as providing access to concierge services, advanced clinical care navigators, and focused education on benefit plan features and best practices, are great ways to ensure full value from a company’s investment in benefits.

A new beginning

The black box of health care and insurance reimbursements is opening to those who pay for it – employers and employees. Everyone deserves high-quality, cost-efficient care delivered safely and effectively and everyone involved – participants, employers, brokers, providers, payers – play a role in driving this health care transformation. Whether it’s the tools to support employers’ strategic decisions, establishing key performance indicators (KPIs) or achieving quantitative and qualitative objectives, transparency, once again, is proving to be a powerful spark for change.

Providing employees with necessary benefits at affordable costs isn’t going to get easier or less expensive. But by working smarter and using transparency and innovative technologies to their advantage, employers will get better at delivering comprehensive solutions that make health care more beneficial and affordable. And in turn, they will enhance the success of their organizations with a winning culture that prioritizes employee health and wellbeing.

E. Heidi Cottle, SVP, Cost Containment Strategies, NFP