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Employers plan pay tactics to cut costs

Companies weigh performance pay, value-based pricing

More employers are considering adopting strategies that will help them be more efficient in the way they pay for healthcare services to slow rising costs, according to new survey data from human resources consulting firm Aon Hewitt.

The payment approaches include provider reimbursement based on improved quality outcomes and reference-based and value-based pricing.

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According to the survey of nearly 800 large and mid-size U.S. businesses, 53 percent of the respondents said that moving toward provider payment models that promote cost-effective, high-quality healthcare results will be a part of their future healthcare strategy, the company said in a news release last Thursday.
One in five companies has identified such payment strategies as one of their top three priorities.

An increasing number of employers want to make sure that the healthcare services they are paying for are actually leading to improved patient outcomes, said Jim Winkler, chief innovation officer for health at Aon Hewitt, in the news release.

“Just as employers are requiring their employees to take more control of their health, employers are seeking to hold providers more accountable,” he said in the release. “They are beginning to work directly with health plans to embrace more aggressive techniques to reduce unnecessary expenses and create more efficiency in the way they purchase health care.”

Among the approaches, 62 percent of companies are considering limiting plan reimbursements to a set dollar amount for certain medical services where wide cost variation exists. Just 8 percent of employers currently use this reference-based model, the release said.

This approach is already used in prescription drug coverage, with many employers requiring participants to pay the full cost difference between a brand name drug and its generic substitute.

Through plan design or lower cost, 59 percent of employers reported that they will steer participants to high-quality hospitals or physicians for specific procedures or conditions, the release said.

And 38 percent of companies plan to participate in cooperative purchasing efforts with other employers or groups. Twenty-one percent do so today.

“Employers are increasingly gaining comfort with the notion that they do not need to pay for the wide cost and quality variations that exist in today's healthcare system,” Winkler noted in the release.

Additionally, 31 percent of employers said they decrease or increase healthcare vendor compensation based on specific performance targets, and another 44 percent are considering doing so in the next three to five years.

And while just 14 percent of employers currently use integrated delivery models, including patient-centered medical homes, to improve primary care, another 61 percent plan to do so in the next few years, the release said.