A year after the announcement of its formation, the Health Transformation Alliance (HTA; New York), a group of (now) 38 major private-sector employers, has announced a set of next steps it is taking to “fix” America’s “unsustainable” healthcare system—an ambitious goal but, given the heft of the corporate support behind it, is sure to have some impact. Amazingly (and completely coincidentally, says HTA), its new announcement came out the very day that the American Health Care Act (aka “Trumpcare”) was unveiled in Washington. The two represent near-polar opposite aspects of healthcare financing: one, how public monies are allocated for healthcare for the general population; the other, how employer-funded health plans of blue-chip corporate America deal with health systems.
While the debate over the Affordable Care Act has highlighted the gnawing problems with health insurance, Medicaid expansion and the like, there is a comparable crisis developing in employer-funded benefits. HTA puts out a chart comparing the cost inflation of benefit plans since the turn of the century: while the market basket of general costs of living has risen by 41%, employer benefit costs have risen by 191%, and employee costs have risen by 213%–and these are felt to be just as unsustainable for employers as healthcare spending is for the federal government.
HTA’s overall goals, as it currently defines it, are threefold: managing prescription drug purchasing; translating Big Data opportunities into “cognitive insights” (i.e., understanding health outcomes) and setting up new medical networks. Initial reports of the drug purchasing initiative looked like a new type of pharmacy benefit manager, but one of the actions just announced is a three-year contract with two of the largest PBMs in the country: CVS Health and OptumRx.
According to Robert Andrews, CEO of HTA, this will be a substantially different arrangement from typical PBM contracts, featuring:
- true transparency on rebates and discounts; the PBMs will show the corporate clients who sign on what they’re paying for;
- audit rights to review what the PBMs are doing to earn their fees; Andrews says that this won’t be a “white glove” sort of audit that lets clients look at general practices, but not at detailed transactions;
- participation in formulary decision-making; clients will “have a seat at the table” as P&T committees deliberate formulary placement. Clients will also be entitled to customize a benefit plan, choosing, for example, to include a drug that the PBM has excluded.
“We believe ferociously in evidence; we want to ensure that employers and employees get a dollar of value in healthcare from a dollar of expense,” says Andrews, who notes that there has been an ongoing debate over the role of PBMs in managing the costs of drug coverage, since actual drug costs are often shielded from view, and formulary placement can be influenced by the volume of rebating a drug manufacturer allows. The oversight the PBM contracts allow will enable HTA to test this premise. What is intriguing about the arrangement is that it opens up employer benefit managers as potential direct customers of pharma companies: Conceivably, an employer could choose, based on interactions with a pharma company, to support a drug therapy that would otherwise be overlooked.
HTA also announced that IBM Watson Health is the “data and analytics partner” of HTA (IBM, as a corporation, is a member of HTA). Watson Health will aggregate participating HTA member companies’ data, enabling insights both into outcomes of medical interventions, as well as wellness initiatives to improve employees’ health.
On the medical networks initiative, HTA has selected Cigna and UnitedHealthcare, and the Dallas/Ft. Worth, Phoenix and Chicago markets, as the partners for evaluating four common healthcare therapies: Type 2 diabetes, hip and knee replacement, and back pain. These four treatments account for as much as 40% of healthcare spending of HTA member companies. The network program will kick off in 2018.
The conventional wisdom has been that big corporate employer plans can be as broad or expensive as employers choose for them to be; since they are a tax writeoff for the employer, it’s free money (think of the “Cadillac plans” targeted in the early iteration of Obamacare). The reality, of course, is quite different: how plans are funded are frequently a contentious part of union negotiations, and employers in highly worker-intensive industry (such as healthcare itself, retail or food delivery) have been at the forefront of experimenting with alternative delivery setups. At the same time, employer plans have considerable latitude to develop new delivery arrangements; the question turns up regularly as to why HHS can’t do what commercial plans are doing already. So, the HTA initiative has far-reaching potential, if it gets close to what it initially is setting out to do.
“Fixing health care is something everyone is talking about,” said Kevin Cox, HTA chairman and chief human resources officer for American Express. “The employer-provided health care marketplace, which supplies a substantial portion of the profit margins to the entire health care system, is looking for meaningful change. We’re moving ahead to help companies take better care of the people who take care of us.”
Besides American Express and IBM, the other 36 HTA members include manufacturers, retailers, natural resource companies and financial services, among others; they include Verizon Communications, Shell Oil, Coca-Cola, Macy’s and Marriott International.