Insurers have drawn the ire of government officials by announcing that the new health care law would force them to raise premiums. "I want health insurance companies to be transparent and honest when increasing premiums," Sen. Jay Rockefeller, D-W.Va., declared.
Others have called for hospitals and doctors to be more transparent about prices, in hopes that patients might be able to make more informed treatment decisions. Price transparency is important. But it won't do much to lower health costs. After all, most Americans don't pay for their health care directly; they get it through work. So individual patients have little incentive to comparison shop.
Transparency of medical claims information, on the other hand, can deliver billions in savings. Employers, who pay for most private health insurance in this country - more than $2 trillion annually - should make sure that they have access to such data and that they're taking full advantage of it.
What is medical claims data? Essentially, it's a summary of how employees are using their health benefits. Detailed health records are protected by privacy laws. But by examining de-identified data, employers can find out things like how often workers are visiting the doctor and whether they face potential serious, costly health risks, such as diabetes or stroke.
Armed with this information, software can be used to analyze where a firm's health plan dollars are going, and engage employees in programs to reduce unnecessary costs, mitigate health risks, and improve the quality of care. For instance, if an employer discovers that her workers have a higher-than-average risk of developing high blood pressure, she can start a wellness initiative or set up customized outreach programs to educate at-risk employees.
Patients and employers benefit from early intervention. At-risk individuals receive assistance in improving their health, while firms nip potential health problems in the bud. With the savings, employers can devote resources to improving plan benefits and reducing employee out-of-pocket expenses.
This process of analyzing claims data is at the core of a business strategy called Healthcare Performance Management (HPM). Unfortunately, many businesses are walled off from their medical claims data. Insurance companies often refuse to share it with health plan sponsors. The insurers' resistance is not always consistent with their clients' own business interests. If a company doesn't know how it is spending its health dollars, it will be less able to question ever-increasing premiums.
That has to change. Policymakers should require carriers to give employers access to claims data that are rightfully theirs. Texas provides a model for reform. Two years ago, legislators granted employers access to select privacy-protected employee health information, including total paid claims, their employees' general census data, and total monthly premiums.
Implementing this insurer transparency requirement at the federal level would open the door to huge savings. Companies that have been able to access their claims data have seen as much. Atlanta-based Cumulus Media, a large radio station operator, has used HPM software to identify $4 million-plus in savings among its 2,000 employees.
Berry College, in Rome, Ga., discovered through HPM that it could cut health expenses by incentivizing patients to switch from brand-name drugs to generics. After restructuring into a self-insured plan, Berry saved 6 percent to 8 percent on every drug it covered. Generic drug use jumped 10 percent, generating yearly savings of $238,000.
Employer health expenses are expected to increase 7 percent this year, and to double over the next seven years. Claims data can help businesses ward off those increases. Employers should agitate for access to claims data, and policymakers at all levels should support their efforts by removing the barriers to this data.
George Pantos is the executive director of the Healthcare Performance Management Institute.
The OpEd was originally published in The Palm Beach Post.