A conversation with Elizabeth Mitchell, president and CEO of PBGH

As president and CEO of the Purchaser Business Group on Health (PBGH), Elizabeth Mitchell is a leading voice in U.S. healthcare, particularly on cost and quality issues that affect large, self-insured employers. Her organization represents 40 private and public employers that collectively spend $350 billion on healthcare coverage for a total of 21 million employees. PBGH’s members include Amazon, Walmart, Microsoft, eBay and other large employers. Mitchell has led PBGH for seven years.

Mitchell was interviewed by Peter Wehrwein, managing editor of Managed Healthcare Executive. This transcript was edited for clarity and length.

I wanted to talk to you about this healthcare data demonstration project that PBGH publicized late last year. I’m wondering what the response has been. It seemed like it was a tool that you were inviting other people to use, and that it would accomplish what price transparency is supposed to accomplish.

Well, we hope so. It’s not exactly a tool that someone could look up on the web and use. It’s not the current function. Ideally, maybe one day it would be. But it is a unique tool for self-insured employers. That’s what we were setting out to design and build, and we did that.

There are several things we’re testing. You know, is this data even usable? It’s been out since 2021, but it has not been used by employers, in large part because it is not user-friendly. The files are massive. They take a lot of interpretation. And also, to be truly reliable for purchasing decisions, we found it was very important to combine it with claims data.

You’ve just got to have an adequate sample size. You’ve got to have a complete view to really understand and make sure that it’s all valid. Also, because we’re working with self-insured employers from PBGH, they put equal, if not greater, weight on quality and safety, so we combined it with quality and safety. So it’s quality, safety and price, and that had not previously been available at scale.

What we have found is that it is in very high demand. We have a lot of employers who would like to both access and use it. What we are also learning — and this isn’t terribly surprising — is that it requires significant changes in how you approach procurement. You’ve got to think differently about buying healthcare with this new information and who your partners are because you’ve got to have folks who are, first of all, unconflicted — that’s a big one — and then [those that] understand this data and its implications.

We tested the technical feasibility, but then, more importantly, we tested the utility for business decisions. It was successful on both fronts.

One last element, and then I’ll stop: Because self-insured employers are actually accountable for the completeness of this data, it also gives them a compliance check, because half the data was garbage, and they are the ones accountable for that, so they can go back to their plans and say, “Clean up your act.”

So when you say you need to look at your partners, it sounds like you are saying you need to look at your partners more carefully or scrutinize them. Are you talking about a whole different set of benefit consultants? Could you elaborate on that point?

This all came out of the Consolidated Appropriations Act [of 2021] — heightened fiduciary obligations. It also made it 100% clear, you cannot outsource your fiduciary obligations. The individuals are now held to an expert standard. So it doesn’t matter what their consultant says or what their health plan says; they have to verify it. That’s a part of this change.

The other thing is that the disclosures are now required for vendors. So conflicts that weren’t obvious before are now more apparent. This is part of a whole package of changes. But if, as an example, your consultant is actually paid by your PBM [pharmacy benefit manager] they might give you a different take on the data. And there has been a long history of doing discount analyses that were basically driven by the health plans. It turns out that is inadequate.

Also, what the transparency data shows is that it’s also meaningless. A discount off of a stupid unknown number isn’t helpful information, whereas if you can find out what something actually costs, you can make very different decisions. That changes procurement generally, and it really challenges current roles.

Are there new benefit managers who are unconflicted, who know how to use these data? Are there new players entering this field as a result of price transparency in general, but maybe in particular because of this tool that PBGH developed?

Our members and board have asked us to scale our capabilities to do that. We’re a nonprofit [organization, and] unconflicted. That’s a self-serving answer, but that’s what we’re being asked to do. This is a huge area of work. There are some unconflicted advisers. We are starting to hear from them. I think it’s going to have significant implications for the entire industry.

You function as a benefit adviser?

On a small scale in some discrete areas. I mean, we’re not a Mercer or anything.

Six of our members just asked us to go out to the market with a collective RFI [request for information] best practice contract standards. And they needed someone who would do that on their behalf [that is] unconflicted.

We’re not actuaries. We’re not trying to become a giant consulting house. This is very niche, specialized work, and we do have capacity around that. We have a clinical informaticist on staff. We’ve got a team that can advise [about] using this data.

I was speaking to someone recently about ghost rates. Sometimes they are called zombie rates. Is that something this tool grapples with, and were you able to censor out those zombie rates?

I mean, frankly, it’s kind of inexcusable that the data remains as bad as it is. They’ve had years, and it’s not like these are underresourced organizations. It’s a will, not a skill, issue.

That said, we got a lot of traction with the feds on updating the rules. So about two and a half months ago, they came out with a new schema, using, in part, our results, the barriers that we encountered in this project, to understand what they needed to clarify. Dumping every single rate for a code into a file isn’t helpful. It just makes noise, zombie rates, or whatever there are.

We think that in February [2026], when they will be enforcing this new schema, it’ll get better.

We also have a tool that we’re sharing with our members [that tells them] “this is what you should tell your plan to do.” If they have technical questions, we can help. This is a very dynamic space. I think there’s going to be a lot of change.

KFF reported that the annual premiums for an employer-sponsored family plan are now nearly $27,000. Will price transparency drive down that cost? I’m not going to say “magic bullet,” but some people rate it as being very powerful, that you can start to unleash a shopping function that couldn’t exist before. But not sure whether you see it that way.

We see it as very important. I think it is entirely necessary and entirely insufficient. It is both. If self-insurer employers are fiduciaries, and they’re supposed to be buying fairly priced, high-quality services, they have to have visibility into that, and to date, they don’t. They were asked to do something with no information. That wasn’t fair. So this is a massive step in the right direction. But once you get the data, then you have to use it. So if you find out that your plan costs 30% more than the plan you know your peer is using, you have to act on that. Or if you find out, as an example, that you know the hospital where you are spending the most money for your employees has a D safety rating, you have to do something about that.

But this enables informed strategies. That’s where the advising comes in. That’s what is so powerful.

We have members who are looking at designing COE [centers of excellence] networks using this data. Or designing any sort of high-quality network, because the health plans, it turns out, weren’t really doing that. They called things high-value networks, but there’s no trace of value there. It’s just a PowerPoint. This gives you actual data to see who the higher performers are.

If you don’t want to do any sort of employee disruption strategy, and you find out that your peers are getting way better prices than you are, you can go back and renegotiate using that information. So it creates the possibility of a much more cost-effective, efficient market.

But again, it’s necessary to do that, but if it isn’t applied and used, it won’t achieve that.

On the other hand, this is being used by hospitals to say, “Oh, wow, they’re charging more than us. Let’s jack up our prices.”

It’s really about the use of the data and in whose hands. It’s got to be in the hands of folks with incentives for affordability, and right now that is self-insured employers, the government and families.

Does these price transparency data really put self-insured health plans in a position to managing care in a way that it hasn’t been managed before — if you consider one important part of managing care is getting care at the best price? Does this begin to accomplish managed care, which hasn’t been accomplished by American healthcare?

I don’t know quite how to answer that. I mean, it’s being used to validate or inform direct contracting. To the extent that it is managed care, sure. I think it does give employers information they’ve never had before.

But I wouldn’t say it’s just about price, at least not for jumbo employers. It’s total cost and total cost combined with quality. Most of my members — collectively they’re spending $350 billion a year on health care — are not looking for 10% off on a price for a procedure. They’re looking for high-quality care at a fair price that leads to better outcomes. So … it’s a more complicated calculation, but they do care that their members are going to high-quality, safe providers.

There’s been a lot of attention on direct-to-consumer drug sales. How significant do you think they will be? Are direct-to-consumer sales maybe especially relevant to GLP-1s [glucagon-like peptide-1s] because they are a high-demand drug that can be purchased at a price that a certain number of people can afford — if it’s discounted? I’m wondering whether you see direct-to-consumer sales as a fundamental change, a marginal one or somewhere in between.

To be honest, I think it’s to be determined. It’s going to depend on the prices, right? If it’s unaffordable, then it’s unaffordable. I think it’s going to depend on the number of drugs and types of drugs that are available. But I do think there’s enormous potential, right? Because the pharmacy benefit managers, the health plans, the hospitals and the 340B program — they’re adding a whole lot of costs that aren’t adding any value at all. So if we can reduce some of the administrative costs and make access easier, I’m all for it. I think it’s just too early to know at what scale this will happen and what the prices would be.

Is it a form of cost shifting to the member/patient? Rather than the plan putting the GLP-1 on a certain tier with a certain copayment, the members are having to pay $300 a month.

I think it’s a little early to know. I know for a fact, because I’ve had these conversations, there are employers looking to see if they could buy direct. If they could do that at scale and pass on those savings, then nope. If it is limited just to an individual consumer and there’s no coverage of it, then potentially. I just don’t think it’s clear yet how it’s going to play out.

Changing the subject. The end of the enhanced ACA [Affordable Care Act] subsidies seems to be something that’s limited to the individual market and maybe outside of the concerns of self-insured employers. Am I wrong?

Well, first and foremost, I want to disclose we have exchanges as members, like Covered California as a member, just so that that’s 100% clear.

I think this has a huge systemic effect. I think it is extremely challenging for families facing these enormous increases. I know people personally who are facing that, and many of them will drop coverage because they can’t afford it, period. So … the most immediate impact is on people and families.

I would say after that, though, the more people who are uninsured, the more the costs are typically shifted to private coverage. Whether it’s the hospital — or whoever — who has fewer covered lives to bill to, they shift their costs. The California Hospital Association quoted me [in] justifying that. That was utterly out of context. It is not an acceptable business practice in my mind. I’m just saying it is a current practice. So I think there’s going to be enormous pressure on commercial premiums, but also on providers. And we all use the same hospitals and primary care practices, and if they suffer financially, everyone loses access.

I think there’s the immediate impact on families, but then there’s the systemic impact, and I think this is going to be a major driver of commercial premiums.

What do you think about the Republican ideas of health savings accounts and association health plans that they say are a more efficient way of providing coverage?

Well, you have to have money to save for a health savings account to be meaningful. I’m not opposed to these tools, but they don’t get at the underlying issue of cost. Healthcare pricing is out of control. Having different forms of insurance is good, but it still has to be affordable. And we haven’t addressed the underlying costs.

I actually think the cost-neutral policy was a big deal. That could also disincentivize consolidation. There’s movement in a good direction. But this is a lot to tackle. I’m also on the board of the Office of Health Care Affordability in California, and the industry isn’t embracing the need to reduce costs. Put it that way.

I was speaking to somebody about direct contracting between employers and healthcare recently. I wrote about direct contracting 10 to 15 years ago. Are the circumstances such that it would become more of a reality now? It seems like direct contracting was talked about and proposed, but I’m not sure whether it really had much of an effect.

I think it’s very real. One of the curiosities of my work is I realized that employers don’t publish anything about their healthcare strategies. It’s hard to know. But I would say more than half of my members are doing direct contracting right now. 32BJ, which is one of our members, announced a massive one recently. Boeing and NextEra and many of our members are doing this very successfully. I will tell you, each of them has reported lower total cost, better access and a better experience for employees. It is quite established within my membership that it is a very attractive approach.

One of the things that our data project showed is that for one of our members, their direct contract was giving them much higher value than anything they were getting from UnitedHealthcare. So there’s some evidence too.

It is hard to scale because of the administrative complexities. No employer can go out and negotiate a contract with every practice in every state. It’s just not feasible administratively. If there were some way to make this easier, I think the demand would be here. You do have to have adequate headcount in a market to make it worthwhile for the provider. One of the things that we did to overcome the distributed population is we brought three employers together in one market to do it jointly — and that is really worthwhile, but that’s complex. Negotiating a shared agreement with common metrics across multiple employers is not a light lift, but it’s working really well. I think it’s not only extremely promising. I think it is also quite popular, and the evidence is growing. It’s just not published. I think it’s a real opportunity.

Which three employers in which market?

Well, I can name two, but I’m not allowed to name the other one. Boeing and eBay are two of them, and they’re in the Puget Sound market. The other one may announce at some point, but I’m not allowed to.

Is it just new, or is there some reservation to be public about this on the part of employer No. 3, and is that part of the problem? You’ve referenced the reticence of employers to share? What’s the reason for wanting to keep it secret?

These are massive corporations that are conservative by nature, and this isn’t their core day job. I think once evidence grows, they may be more public, but this is just sort of a consistent challenge.