ver the last decade, private employers from Boeing to Xerox have led the nation in developing innovative strategies for delivering better health at less cost. Whatever the Trump administration and Congress decide to do about the Affordable Care Act in 2017, this business role won’t — and shouldn’t — change. In fact, it should expand, especially if employers are bold enough to ask the administration to roll back outdated regulations that prevent employers, insurers, and drug companies from linking drug prices to real-world health outcomes.
Drugs represent the fastest-growing component of employer health spending. But they also represent the greatest opportunity for driving greater value across the health care system. When medicines are used appropriately, they can reduce expensive complications from chronic diseases that account for nearly 90 percent of US health outlays. From HIV to high blood pressure, innovative medicines have helped millions of Americans live longer, healthier, and more productive lives.
The problem is that high drug copays and coinsurance can put effective medicines out of reach for some patients. This is because coverage decisions are often based on manufacturers’ willingness to offer large discounts on a drug’s list price, rather than on how well the drug works. If an individual winds up in a hospital or becomes too sick to work because he or she couldn’t afford an effective medicine, everyone loses.
Patients aren’t monolithic, and drug prices shouldn’t be either. Employers are well-positioned to help broker new payment models that reward both insurers and pharmaceutical companies for getting the right medicine to the right patient at the right time. If drug companies are willing to accept more of the financial risk for a drug that doesn’t work as advertised, then they should also share more of the upside when it does. Insurers should also be rewarded for developing cutting-edge networks of doctors and hospitals that focus on using information on medicines’ real-world performance to drive the best long-term outcomes for patients.
Cancer care is the right place to experiment with new payment models. A wave of innovative but high-cost medicines are reaching patients faster than ever before, and doctors will be using them in combination with traditional cancer-fighting tools like chemotherapy and radiation. Cancer patients, physicians, and payers could be overwhelmed by the options and costs.
Employers can push for the use of new health information technology platforms that can link a patient’s genetic profile to the best treatment options, rapidly match patients with clinical trials that are testing new medicines, record outcomes after treatment, and even benchmark provider performance relative to costs. By expanding state-of-the-art care to more patients, employers can ensure that every dollar spent on cancer care results in fewer side effects, longer survival, and even more true cures.
Employers are uniquely suited to help lead the transition from paying for cancer by the pill or infusion to paying for it based on outcomes. Employer health plans are trusted by more than 150 million Americans as a stable source of high quality, stable insurance. Large employers typically retain employees for multiple years, which allows them to see a return on upfront investments in health information technology and disease management.
In our conversations with drug companies and insurers, though, we’ve heard repeatedly that the development of new cancer care payment models are being slowed by federal regulations like Medicaid’s “best price” requirement, Medicare’s wholesale price benchmarks, and federal anti-kickback regulations. For instance, if a manufacturer offered a hospital or insurer an “if it doesn’t work, you don’t pay for it” guarantee for a cancer medicine, that “price” could be seen as an illegal kickback to Medicare providers.
Employers should lead an innovative alliance of stakeholders — including drug companies, insurers, patient advocates, and providers — to ask the federal Centers for Medicare and Medicaid Services for waivers from the biggest regulations inhibiting outcomes-based contracts. The “lessons learned” on the performance of these contracts could then be published to drive other payers to learn from the experience, as well as to identify strategies for cancer care excellence. This would give regulators and payers more real-world evidence on how well promising medicines work.
Many of America’s companies, from Google to UPS, have spent the last two decades learning how to use data analytics to rapidly retool manufacturing and customer service platforms to deliver better value to their customers. They should now use the same principles to ensure that the rapid pace of innovation in cancer therapy is harnessed to the cause of improving patient care — one patient at a time.
Six Sigma is a disciplined, data-driven approach to improvement. It began in engineering, but has spread to many other sectors. Intel used its experience in Six Sigma lean production processes to launch a Healthcare Marketplace Collaborative in metropolitan Portland, Ore. It brought together Cigna, an insurer; local providers such as Providence Health and Tuality; and the Oregon Public Employees Benefit board to provide “the right care in the right place at the right time and the right cost for Intel employees and families and all other Portland-area health care users” for six selected conditions. This program also includes screening for conditions such as diabetes and high blood pressure. Costs for three of the conditions fell by an impressive 24 percent to 49 percent. Intel’s experience shows that dedicated employers can become transformational leaders across the health care system.
The human and financial case for an employer-led alliance to drive cancer payment innovation is crystal clear. By focusing on best practices for cancer payment reforms and seeking a safe harbor from antiquated regulations, employers can do well by doing good, providing a case study for private sector collaboration and leadership that the entire health care system can learn from.
Paul Howard is director of health policy at the Manhattan Institute. Laurel Pickering is CEO of the Northeast Business Group on Health.