Employers want to know whether payment reforms are an effective strategy for containing costs and increasing the value of the health care they purchase. There is a dearth of evidence on the impact of payment reforms within employer health plans, and there are real obstacles that impede employers from conducting the kind of rigorous evaluations that would produce it. However, employers can play a role in generating and sharing the evidence that they seek.
Employers Face Barriers to Evaluating their Payment Reforms and Sharing the Results
An increasing number of employers are considering payment reforms as a strategy for improving the value of the employee health care they purchase. Yet employers have little trusted evidence about how well payment reforms actually work. What little payment reform evidence is publicly available from commercial markets often consists of cherry-picked results based on a few quality measures and simple cost-savings estimates. Employers also rely on actuaries and benefit consultants to understand which payment reforms to implement and to forecast their potential impact. However, the evidence evaluated during these private consultations is not shared broadly. The result is an inefficient system in which progressive employers are experimenting with payment reforms but having a difficult time learning from one another about what works.
There are multiple barriers that prevent employers from conducting rigorous evaluations of payment reforms and promoting their results, including:
- Because most employers rely on their health plans to administer payment reforms, they have less direct access to some of the data required for conducting an evaluation.
- Most employers lack the capability and the technical resources to conduct a rigorous evaluation themselves.
- Many employers may be reluctant to outsource study design and execution decisions to an independent evaluator.
- In addition to the direct costs of an evaluation, the process may burden an organization and its employees if it requires staff time for participation and additional data collection.
- Cost savings estimates—whether positive or negative—may impact an employer's future contract negotiations and rate setting with their health plans.
- Evaluations that show no impact or negative results could reflect poorly on the employer and leaders who decided to implement the reform.
Employers face a collective action problem in which they seek shared evidence about which payment reforms are working, but may not individually generate it or be in a position to share it
Private Employers Have a Leading Role to Play in Advancing our Understanding of Payment Reforms
To date, the federal government has led the effort to evaluate alternative payment models piloted within federal health insurance programs and publish the results. The Trump administration has indicated interest in more private sector leadership on payment reforms. Furthermore, while the Centers for Medicare and Medicaid Services (CMS) produces rigorous independent evaluations, their payment reform demonstrations are largely limited to Medicare and Medicaid populations. Employer health plans cover different and more diverse patient populations, for which the impact of reforms within Medicare may not be replicable.
Costs are increasing, cost-sharing by consumers is increasing, and these costs impact profits and wages. Employers need to know whether to prioritize payment reforms as a solution or look to alternative strategies such as benefit design, limiting provider networks, price and quality transparency, or wellness programs. To make that decision, they need reliable and trusted evidence about whether payment reforms work in the commercial market.
The Path Forward Starts with Employers Demanding More Rigorous Evidence from their Health Plans
Individual employers may not be able to produce evidence themselves, but they can serve as effective change agents by insisting that carriers supply them with better evidence-based reporting when they are selecting health plans or during annual contract negotiations. Employers should seek rigorous and comprehensive evidence for the impact of payment reforms to facilitate comparison across alternatives and support good decision-making. If enough employers make these demands, plans will respond by better evaluating the payment reforms they administer and better communicating the results of those evaluations.
Catalyst for Payment Reform (CPR) has laid the groundwork for employers and other health care purchasers to take this critical first step. CPR has constructed an evaluation framework that enables purchasers to evaluate the design and impact of payment reforms in a standardized fashion. In order to capture the requisite information from health plans, CPR has also developed model contract language that employers can use to establish reporting requirements for their plans, along with a request for information tool that makes it easier for employers to collect key characteristic information about payment reform design and impact on feasible measures of quality and cost. In combination, these tools empower employer purchasers to establish a clear expectation that their plans share evidence about payment reforms and guide collection of that evidence in a standardized manner.
The process of clearly and easily comparing payment reform approaches can inform employers' investments in the highest value care for their employees. As employers adopt the CPR framework and tools, they advance the health system towards a critical mass of demand for evidence about payment innovation and reform. This movement engenders a culture in which commercial payers are more open about sharing evidence with their purchasers so that it can be aggregated and analyzed for better and faster learning about which reforms get the best results.
Novel Approaches for Faster and More Widespread Evaluation
In addition to these positive steps toward common evaluation results, we can leverage data from across payers and employers and use it for evaluation. Some employers and their plans may be willing to share their relevant claims and clinical data to conduct consistent evaluations. But for those who are not, for proprietary or other reasons, an alternative "distributed" collaboration is possible.
In this approach, each employer retains control of its own data but conducts consistent analyses and pools the results. Distributed analyses have been implemented in other areas of evidence development in health care, such as the public-private collaboration of the Food and Drug Administration's (FDA's) Sentinel initiative, in which individual health plans conduct analyses of drug safety questions, and the broad-based Observational Health Data Sciences and Informatics (OHDSI) collaborative. Using a distributed approach to data analysis, an entity with technical expertise, such as the Duke-Margolis Center's Payment Reform Evidence Hub, could provide technical support and coordination for the implementation of a standard evaluation approach using the CPR framework. Individual employers and plans would analyze their own data using common data models and methods. Each contributing employer would share only the resulting summary data—such as their type of payment reform and their results on the common quality and cost measures—as well as the quality assurance steps they took to ensure that data are analyzed consistently.
For example, employers implementing episode payment models could pool their results for the CPR quality and cost measures for that episode. The resulting multi-employer evidence could then be summarized into one common set of results on episode performance and publicly distributed (along with details of the methods used).
This distributed analysis approach across multiple employer-sponsored plans addresses many of the challenges that currently inhibit evaluations of employer payment reforms and the sharing of results:
- Data can be evaluated and the results shared without identifying the individual payers or employers who contributed.
- Evaluations can be conducted more rapidly and at a lower cost than the one-off evaluations of a few employer reforms that have been conducted to date.
- The increased scale of the analysis could offer greater power to detect a significant impact of a payment reform.
- The same methods could be applied to data from employers that did not implement reforms to construct trends for "control" populations, enabling more rigorous analysis.
The Role for Public Payers and Policymakers
CMS' payment reform demonstrations have produced crucial early evidence for the impact of various reform models and have investigated key questions related to cost savings, quality improvement, and patient satisfaction. The publicly shared results of these projects have encouraged state and commercial payers to undertake promising reforms. As private-managed care plans are implementing payment reforms in many states, there is an opportunity for state policymakers to institute reporting requirements on payment reform evidence similar to what employers are demanding through the CPR framework. State employee health plans could do the same, either with their health plans or third party administrators. As the same carriers often operate in both the Medicaid managed care and employer-sponsored insurance marketplaces, aligning reporting demands for payment evidence could facilitate the broader realization of a culture of evidence generation and sharing.
The more we can do to create a collaborative environment that removes barriers to evaluation and better sharing of evidence with employers, the more motivated employers will be to break free from the current inefficient system and champion health care reforms that work. Greater transparency and sharing will lead to faster learning and better alignment of purchasing strategies between the public and private sectors, and will ultimately accelerate transformation of the health system to a value-based future.
Authors' Note
This article is part of a project funded by the Laura and John Arnold Foundation. The article is an independent work product and the views expressed are those of the authors and not necessarily those of the funder. We would also like to thank the Evidence Hub expert working group for its guidance throughout this project as well as Rob Saunders, Matthew Harker, and Mark Japinga from the Duke-Margolis Center for their assistance in drafting.
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