Self-insured employers using pricing information in contracting talks

Through price transparency, self-insured employers are trying to boost contracting efficiency between their insurance carriers and healthcare providers, according to a Health Affairs blog.

The blog post was written by Ge Bai, PhD, an associate professor of accounting at Baltimore-based Johns Hopkins Carey Business School and associate professor of health policy and management at Johns Hopkins Bloomberg School of Public Health; Chapin White, PhD, an adjunct researcher at the RAND Corp.; and Gloria Sachdev, PharmD, president and CEO of the Employers' Forum of Indiana, an employer-led multistakeholder coalition.

In the blog, the authors cite various examples of price transparency studies used by self-insured employers to guage contracting inefficiencies.

A RAND Corp. study  done in collaboration with the Employers' Forum of Indiana found that private insurers, on average, paid hospitals 241 percent of Medicare rates in 2017.

The authors of another study published in September 2017by RAND Corp. and the Employers' Forum of Indiana showed that across 120 Indiana hospitals, prices negotiated for employers in the state averaged 272 percent of Medicare rates for the same services at the same hospitals between 2013 and 2016. 

"The pricing information generated from these studies gave self-insured employers unprecedented insight into the actual contracting outcomes between their carriers and hospitals. Since Medicare prices have already been adjusted for geographic variations in the standard of living, employers can compare the relative prices with local, regional and national relative price benchmarks and monitor the trends over time," the blog post authors wrote.

The authors added that these studies paved the way for certain actions by forum employers, such as beginning discussions in 2017 with Anthem Blue Cross Blue Shield, asking the insurer for new health benefit and payment model options "based on high-quality care and low price." 

Read the full blog post here.


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