Montana is signaling that it may drop an innovative way to set the price its public employee health plan pays hospitals for services that has already saved the state Millions of dollars and a model for health
The program has a reputation among employers and health care price reform advocates for establishing in 2016 that the health care program will The maximum amount paid for outpatient services. These amounts are tied to Medicare reimbursement rates. Adopting this model, called reference pricing, has saved the state tens of millions of dollars. Taxpayers have helped fund the health care program, which provides coverage for public officials and their families, totaling about 28,800.
Montana did not invent reference-based pricing, but the state sets prices for all services by having a health care program of this size, not just certain procedures, such as knee Joint replacement surgery.
Now, Montana is adapting its model, just as more states and employers looking to cut costs consider adopting it. That has health economists and others working elsewhere working to lower hospital prices wondering if the state is ahead of the curve again — or set itself back in a tailspin.
“We look forward to Montana’s success story,” said Gloria Sachdev, president of the Indiana Employers Forum, a nonprofit trying to improve healthcare pricing. “Now it’s doing something new and I think a lot of people will be looking at Montana.”
In September, the state awarded Montana Blue Cross and Blue Shield A contract to take over the management of the public employee health plan begins next year. The contract calls for setting an overall target for how much the program will reimburse hospitals, based on Medicare rates. It enables Blue Cross to achieve these goals through reference-based pricing — but also through the use of multiple reimbursement models to negotiate deals with individual healthcare providers.
The state said in a press release announcing the contract that its new reimbursement target will save $28 million over the next three years. But details in the contract on how this will be achieved are vague.
Blue Cross, one of Montana’s largest insurers, won’t detail its plans, while the loyalty benefits program management company discloses the state’s contract with the current administrator of the employee health plan decision to question. Allegiance has held the contract since the state adopted a reference-based pricing model.
Blue Cross spokesman John Doran said state officials instructed company officials to direct all concerns to the Montana Administration.
When asked how the impending changes would affect the health plan’s existing model, Montana officials pointed to the state’s contract with Blue Cross. According to the filing, Blue Cross can create “customized alternative payment arrangements with suppliers” subject to state approval.
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In the state’s press release, officials said the goal is to “modernize” six annual reimbursement strategy. Misty Ann Giles, director of administration, said in a news release that the state selected a vendor to help it “become more agile to effectively achieve its goals.”
The United States has been grappling with rising health care costs. The Centers for Medicare and Medicaid Services estimates that healthcare spending will grow nearly 10 percent in 2020 to $4.1 trillion, or $12,530 per person. More than 160 million people in the United States have employer-sponsored health insurance. Historically, the prices paid by employee health plans have been privately negotiated by healthcare providers and third-party administrators such as Blue Cross, often starting with a hospital-proposed price.
This process has exacerbated a lack of transparency about the cost of care and has resulted in widely varying prices paid by private insurance plans. In a study of medical claims data from 2018 to 2020, the RAND think-tank found that private insurers in some states, such as Washington, paid less than 175% of hospital prices that Medicare paid for the same services. %. The same facilities, while in other states they pay 310% or more of Medicare rates.
In 2016, Montana made a bold leap. Rather than negotiating from a hospital’s list price, the state sets a range for what hospitals can charge for services, setting the maximum cost at a fixed percentage above Medicare rates. If hospitals refuse to negotiate through this model, they risk losing access to patients insured through the state’s largest employer. At the time, Montana said the program had been losing money for years and risked its reserves falling into negative territory. By 2017, Bartlett said, the plan’s reserves had accumulated more money than the state’s general fund, and premiums paid by state employees remained flat.
“We’ve flattened the price curve, and in fact we have a negative,” said Bartlett, now a senior policy fellow at the National Institute of Health Policy on how to lower health care Cost to advise other states. “This is unheard of.”
Dr. While Allegiance is the health plan’s administrator, it has saved more than $48 million, said Stephen Tahta, president of Allegiance Benefit Program Administration.
Hospital representatives say a growing number of employer-based schemes are considering increased reliance on reference-based pricing.
In recent years, California’s retirement plan that provides insurance benefits to public officials has worked to expand reference pricing for certain drugs.
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Colorado joins purchasing coalition negotiating with hospitals over this year’s public employee health plan pricing, seeking to Medicare rates are used as a benchmark. While major health systems have so far bucked the trend, patients also have a health care price comparison tool to choose from those who charge affordable and provide high-quality care, said Bob Smith, executive director of the coalition and executive director of the Colorado Health Business Group. Providers.
The American Hospital Association opposes reference-based pricing, saying it could increase the cost of care that patients must pay. One way that could happen is through balancing billing, when the provider charges the patient the difference between the cost set by the plan and the amount the provider charges.
Those who advocate for pricing reform have said that hospitals’ initial prices before negotiation may be arbitrary, and that Medicare rates are a fair starting point. Medicare reimbursement can be adjusted if the provider faces high costs, such as operating in a rural area or hiring staff to provide specialty care.
In the contract awarded in September, the state set a cap that Blue Cross plans to pay providers no more than 200% of Medicare rates in total in the first year. The contract stipulates that Blue Cross will reimburse Medicare providers for 180% of Medicare rates in the third year of the agreement. Target.
After KHN shared details of Blue Cross reimbursement in state contracts with Rand’s health economist and policy researcher Chris Whaley, he said it was difficult to know how the new approach would work out. Blue Cross’s plans don’t say how often the company will negotiate deals with suppliers, rather than reference pricing. That could cause Montana to lose focus on its reimbursement strategy, Whaley said.
“It looks like this model has worked well,” Whaley said. “Will a reference-based pricing model be developed and improved? Or could it be stripped away and not have the same impact as before?”
Allegiance claims the contract was through an illegal bidding process Granted, and it may
Administration spokeswoman Belinda Adams said state officials are reviewing the issues raised by Allegiance but believe the hiring process is fair and lawful of. .
If the parties fail to reach an agreement to resolve the dispute, the state has 30 days to decide on the company’s claim from Allegiance’s protest. Meanwhile, Adams said, Blue Cross is preparing to take over management of the public employee health plan in January.
Kaiser Health News is the national health policy news service. It is an independent editorial project of the Henry J. Kaiser Family Foundation, not affiliated with Kaiser Medical Institution.
