By Sabrina Corlette, Karen Davenport, and Emma Walsh-Alker

The excessive and rising price of well being care is lowering folks’s entry to important providers, suppressing staff’ revenue, and lowering enterprise competitiveness. Many state worker well being plans (SEHPs) are the biggest industrial 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 relating to plan choices and states’ price containment methods. On June 28, 2023, we launched an replace on these plans’ progress within the final two years, in addition to the influence of latest federal coverage modifications.

Within the two 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. However these good occasions for SEHP directors won’t final perpetually and SEHPs, like different payers, count on prices to extend. SEHPs are additionally topic to new federal necessities selling better transparency of well being care transactions below the Consolidated Appropriations Act of 2021 (CAA) and protections for coated staff from surprising out-of-network billing below 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 price containment methods. Whereas solely a handful of SEHPs report with the ability to quantify the financial savings generated by any of those methods, a couple of initiatives emerged as promising candidates for price financial savings. Beneath are some key findings from our research:

Spaghetti on the Wall: SEHPs Strive A number of Methods to Constrain Value Development

As they did in 2021, SEHPs report that prescription drug and hospital costs are the highest drivers of price progress for his or her plans. Nevertheless, as in 2021, SEHPs’ methods stay primarily targeted on prescription drug prices and enrollee utilization of providers, fairly than hospital costs. Of the highest 5 price containment methods being pursued by states, just one (Facilities of Excellence) has the potential to have an effect on hospital pricing. Though no single price containment technique surfacedas a magic bullet, promising efforts included reference pricing, tiered community plans, and multi-payer buying initiatives.

Accountability for Third-Social gathering Distributors

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. Whereas 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 embody price containment targets for TPAs throughout their procurement processes. Thirty-two SEHPs report that their TPA contracts embody accountability mechanisms if their TPAs fail to curb price progress. Nevertheless, in interviews a couple of SEHP directors reported that they’re taking up 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 price containment by their TPA distributors.

Knowledge: Extra Availability however Restricted Capability to Use It

Since publication of our 2021 report, federal guidelines requiring plans and hospitals to publicly put up 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 vital limitations constrain translating improved entry to knowledge into extra aggressive price containment methods.

Restricted Consideration to Limits on Shock Billing

As plan sponsors, SEHPs are liable for implementing the federal No Surprises Act. Nevertheless, 34 SEHPs reported not understanding, 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 price progress. Nevertheless, extra SEHPs have to systematically measure the influence of their price containment methods, with a view to assess what’s, or isn’t, working. SEHP directors discover their analysis efforts hindered by challenges accessing and utilizing claims and pricing knowledge, and whereas they report a need to make use of this knowledge to tell community and plan design, they don’t seem to be but well-situated to take action.

Efficient price containment methods for SEHPs require tradeoffs, and SEHPs should steadiness the competing calls for of stakeholders. Mitigating potential backlash typically includes injecting better 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 price management efforts.

SEHP directors are bracing for rising costs and a tightening fiscal image. Figuring out and increasing on price containment methods that successfully goal main price drivers, generate minimal “member friction,” and that don’t require appreciable administrative overhead is difficult for SEHPs. Nevertheless, a number of SEHP directors are demonstrating that it’s attainable to implement methods that maintain promise for lowering supplier worth inflation whereas additionally minimizing stakeholder pushback.

Obtain the total report right here.

Entry an interactive state map and downloadable knowledge tables right here.