GOAL: Get Employers Involved Actively in Improving Quality

Employers and other purchasers of group health benefits are scrambling to comply with the provisions in the new health insurance reform bill signed by President Obama in March, the Patient Protection and Affordable Care Act. Actuaries are working overtime to figure out exactly the costs of the bill, but most employers I talk to are bracing for 5-10% increase in employee premiums by September, plus significant upfront costs reevaluating and revising benefits packages and restructuring benefits programs to adhere to with new mandates.

These compliance costs are only the beginning. The health reform bill qualifies 16 million more Americans for Medicaid, which is the program for low-income families, which traditionally pays providers only a fraction of the cost of care. The bill also counts on reductions to Medicare reimbursement to meet its budget targets. With less coming from Medicare and Medicaid, hospitals will need to find some money somewhere, and they will likely shift the perceived shortfall onto private payors. The result is not insignificant: the average premium for a family of four is already $1788 higher because of this cost shifting.

Still, despite the perils ahead, many purchasers are optimistic about the prospect of reform because they see awful quality problems every day and know how important change is. Purchasers sit in dismay each month as they read their claims reports, the dry bureaucratic language too often masking tragic medical errors and that devastate employees and their families. Purchasers have long been frustrated by the inability of the federal government to show leadership in fixing the problems. Many purchasers tried to take matters into their own hands, starting pay for performance initiatives or other incentive programs to influence providers to improve, but without the weight of federal leadership, even the largest and most active employers haven’t made the difference they would hope for.

The health reform bill includes provisions with great promise for improving quality, and many purchasers advocated for them. For instance, the bill calls for future pilot programs to test ways to organize care more efficiently, and better reward chronic disease prevention and primary care. There is a program to improve how we measure outcomes of care, so in the future we can identify which providers achieve the best results for patients. The bill has some good language holding health insurance plans accountable for performance and cost-effectiveness, and great language around wellness including permitting employer incentives and a long overdue strategic national approach to improving wellness.

Unfortunately, there is a long timing gap between when purchasers pay the bill’s costs (now) and when employees enjoy the bill’s benefits to quality (five to ten years or more from now).

This timing gap between costs and quality is a donut hole that must be filled. Upwards of 100,000 Americans a year continue to die from preventable medical errors: that’s like a jumbo jet crashing every other day and killing all on board. We would not wait five or ten years to crack down on the airline industry if that was happening. According to tracking by Leapfrog, there remain a litany of major problems in hospital quality, including some high mortality rates, persistence of medical errors, documented wasteful spending, and troubling complication rates and infections. Some hospitals perform four, five, or even ten times better than a hospital down the road for the same quality indicator.

Two things need to happen to fill in the donut hole and assure that health reform truly improves the health care all Americans recieve. First we need to encourage Congress to revisit the legislation to accelerate the quality and cost-effectiveness measures in the bill, and add a few more. For instance, purchasers have long advocated increased transparency of health information by provider, so consumers can better compare performance among different doctors and hospitals. That tends to be unpopular with some lobbyists, but it is essential for engaging the public in seeking out the highest quality providers, and crucial in motivating those providers to accelerate their quality improvement efforts.

Second, no matter what happens in Washington, purchasers must step up their demands for improved quality for their employees, and use their purchasing dollars wisely to incentivize change. With the momentum of reform, purchasers have the wind on their back and their leadership could have immediate benefit. Good models exist, and employers should turn to them for next steps in improving quality. Many health plans have pay for performance programs that would benefit from employers’ pushing for their implementation, and other good models are out there: The Premier Demonstration Project, Bridges to Excellence, Institute for Healthcare Improvement, and some Leapfrog initiatives are among those that have showed great progress in improving employee health and well-being—and controlling wasteful costs at the same time.

Policymakers are the first to acknowledge that the reform legislation is built on the very foundation of our nation’s employer-based health coverage—and without that foundation Congress would have to start over. As the core of that foundation, employers have a right and a responsibility to insist that reform address the needed improvements in quality that their employees deserve—and do so now, not later.

Leah Binder,

CEO, The Leapfrog Group