Bartlett discusses how crunching data and tough negotiations enabled her to save the state's struggling employee health insurance plan.
People were mad because the plan was losing so much money, the governor’s office was looking bad, and employees and unions were angry. Vendors all tended to have a solution. They would say we needed to go with this or that new plan. But there wasn’t any kind of strategy, and data wasn’t available or being used to make decisions or manage contracts.
I found that 43% of costs were coming from Montana’s hospitals and, of that, 87% was from 11 acute care hospitals, which are the largest in the state. Only 13% were critical access, rural facilities. I also focused on pharmacy, which was 18% of our costs.
The area that was getting a lot of talk in the legislature was on-site health centers, but I realized that was a political issue. It was getting lots of noise and attention but was only about 3% of the plan’s spend.
We prepared a graph using hospital semi-private room and board fees, which are easy to find in the data, from 2012 to 2014. I was able to chart the chargemaster fee and see the allowable costs. It clearly showed that, no matter what discount you get, you are going to follow an upward trend in cost. They control the chargemaster, so they can say they are giving you a better discount but then just raise the price that discount is based on.
If we had, instead, used a fee that is 200% of Medicare during that same time, the prices weren’t as far apart, and they didn’t go up as much, because they were limited to Medicare inflation.
I put out an RFP and hired Allegiance Benefit Plan Management to do the work. They looked at what our costs would have been for a year’s worth of claims if we’d reimbursed on a Medicare-plus basis. The lowest costs were around 109% of Medicare’s rates, and the highest were 611%. In that 200% range I wanted, there were about four hospitals. I knew I needed to bring the outliers in.
But I kept pushing because this is taxpayer money paying for these benefits. I steered union anger toward that one hospital. I said, ‘OK guys, help me.” Their pay raise was dependent on lowering the benefits, so I posted the phone numbers and addresses of the CEO and CFO and they began putting a lot of pressure on them. After that they signed, and it went into place in July 2016.
The state always assumed we had a transparent pass-through model and there was no spread pricing [which means a PBM pays the pharmacy one price for a drug and charges the employer a much higher price]. Rebates were capped at $20 per prescription, which was low, and the rest went to the co-op or CVS. The spread pricing excess went to the co-op, and there were tons of administrative fees.
So we did another RFP. In our new plan, we get 100% of the rebates, and we can audit that. The new plan also cut out spread pricing on brand drugs.
Members get a premium incentive if they have an annual physical at one of the state’s health clinics. There’s also no co-pay for that visit. That has improved access and is less expensive for us than if they go to a private-sector provider.
Our medication therapy management [MTM] was mostly done by phone or letter before. I worked with an independent pharmacy group and the University of Montana School of Pharmacy to create an MTM program where they did personal outreach. They analyzed our pharmacy data and identified more than 3,000 members who could be targeted for help with the medications. That began in July 2018.
I have seen small school districts that have joined together to create a purchasing co-op. I encourage them to join an employer forum or something similar where they can get access to data, education or training.
And as a small employer, they really have to delve in and ask questions about their contracts. You can’t just look at the reports you are given by a broker or TPA [third-party administrator].
I saw a group in Indiana when I was speaking there once with 700 covered lives, and they have done a lot to manage their coverage. But they have a disruptor. Their HR director who leads the efforts is on top of it all and is calling the shots. She has a large health center nearby and does direct contracting and has saved a lot of money that way.
You really have to get the data and find out what you are paying. You can’t let the insurance company tell you what the repricing of Medicare is. Get an independent entity to see what you are really paying. That’s the first step, and you can do that pretty fast. Most companies could compile the data and turn it around for you within a month. It’s not all that costly. Once you have that, you can start a dialogue with providers. You just have to remember that everyone involved is going to have to give up something.
We did a lot of communication with employees about what we were doing just because it was causing some anxiety. We focused on working on incentives and helping employees take charge of their own health. We pulled in the vendor who manages our health centers and had a nurse and wellness coordinator involved at the health centers to get people more engaged. The jury is still out on the effectiveness of wellness programs, but it was good to offer them something they could take action on to reduce some of the fear of change.
If you were to ask them about it now, they would probably say they really didn’t know that much about it and they don’t see anything different. You’re probably not going to hear much from your employees. All of the hospitals have had record profits in the past couple of years and are doing just fine, which I was glad to hear.