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Shedding Light on Healthcare’s Dark Arts

MHE PublicationMHE February 2023
Volume 33
Issue 2

François de Brantes, a member of the Managed Healthcare Executive ® editorial advisory board and senior partner at High Value Care Incentives Advisory Group LLC, describes what he believes has caused a major inflection point in the management, delivery and payment of U.S. healthcare

It will have taken an act of Congress to cause this tectonic shift in the industry. Perhaps nothing else would have worked to force the change. The forces and interests in American healthcare are too entrenched for it to have happened otherwise. One can never underestimate the staying power of inertia.

The act to which I’m referring is the Consolidated Appropriations Act, 2021. It has two parts that are responsible for what I see as a major inflection point in the management, delivery and payment of U.S. healthcare. The first, the No Surprises Act, results in some important protections from overbilling for patients, but in the biggest picture is probably less disruptive. The second, Transparency in Coverage, is not.

Taken together, they are forcing a fundamental reckoning of the major actors in the industry — providers, payers and intermediaries. Let’s briefly examine how.

Proprietary no more

As of July 1, 2022, all hospitals and all commercial payers — whether they are large carriers or small third-party administrators — have had to fully disclose their negotiated rates. For hospitals, that disclosure has been limited to certain services. But for payers, it’s all services and all providers. The result has been petabytes of information. Although the files are unwieldy and lack context, they are accurate, comprehensive. Many organizations, from large academic institutions to startups, have been busy downloading and unpacking them. Some are offering outputs and analysis (for a price) to anyone who wants (or can afford) them.

The upshot is that there are ways to see the price of any service that’s contracted between any given payer and any given provider. Gone are the days when health plans and providers were claiming that all this information was highly confidential, proprietary and subject to various nondisclosure clauses in contracts.

Heightened scrutiny

Self-insured employers have nominally been the fiduciary for their health plan, but many have (wrongfully) thought that this duty was transferred over to their health plan administrator as part of the administrative-services-only contract. The Transparency in Coverage portion of the Consolidated Appropriations Act makes employers’ fiduciary obligations very clear, with several layers of obligations. These include an obligation to be prudent in the contracting of services and ensuring that the prices paid are competitive, the banning of all gag clauses and other confidentiality agreements that would prevent the employer from disclosing healthcare prices to its covered plan members, and a requirement to have any broker or benefit consultant used fully disclose all direct and indirect fees that they collect as part of their engagement with the employer.

Starting this year, employers began having to disclose to plan members the price the plan member will pay for certain services. Over the next two years, this obligation expands greatly to all services, bundled and not, and across all providers in the plan’s network. These changes have bubbled up as concerns into parts of employer C-suites that have never been involved in the oversight or management of employee health coverage. Chief financial officers, chief legal officers and any number of compliance officers are, appropriately, asking a lot of pointed questions, not least of which is whether the benefits managers know whether the company — and its plan and plan members — are getting value for the money spent.

Healthcare insiders know that prices vary, but by how much has remained hidden. Not anymore. Insiders also know that some brokers and benefits consultants have had conflicts of interest tied to commissions they receive. Those conflicts are now seeing the light of day. Another known secret: Most health benefits are structured in a way that punishes those who are sick, especially people with chronic illnesses. All plan members are about to find out how much really comes out of their pockets and how much it varies by physician, hospital and health system.

The foundation on which health plans, providers, brokers and others have built their businesses is starting to shake and will be shaking a lot harder in the months to come. Some will crumble. Others, reformed and better, will rise.

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