Some of south Louisiana’s largest private companies, which together provide health insurance coverage to about 38,000 employees and family members, are forming a new coalition aimed at controlling health care costs without reducing quality.
The Louisiana Employer Coalition, as the group is called, plans to officially launch next year. Six employer members have signed up so far, including: Laitram, Edison Chouest Offshore, Excel Group – a major industrial contractor, Grand Isle Shipyard, Team Automotive Group and Turner Industries.
For now, the coalition is focused on educating its members about online pricing and transparency tools that can be used to compare fees for local doctors and hospitals and assess which ones offer the best value.
But one of the coalition’s goals is to explore creating a “narrow network” arrangement, in which coalition members agree to direct the employees and dependents they insure to a limited group of doctors and hospitals that would lower what they charge for care in exchange for guaranteed patient volume.
The coalition is in its infancy, but it represents the latest effort by major employers to tilt the trajectory of rising health care costs.
Others in the U.S. have tried it with varying degrees of success, including the Houston Health Business Coalition, whose 30 employers represent about 1.8 million policyholders. That organization, which is 10 years old, has yet to move the needle on cost-cutting, said its executive director, Chris Skisak. But it plans to launch its own network in 2024.
“It takes a while,” Skisak said. “But the important thing is that employers get together and start working on this or nothing will change.
The coalition emerged from a COVID-era strategic planning session of a Baton Rouge nonprofit called the Louisiana Health Care Quality Forum, which is made up of employers, health care providers and insurance companies. Its mission is to improve health care and health outcomes in the state.
“We asked our members what is the biggest pain point in your industry and is there anything we should be focusing on?” said Cindy Munn, CEO of the forum. “It was unanimous that they are struggling with health care costs and want help to reduce costs.”
Over the next two years, the forum began building a business coalition.
Large self-insured companies were an obvious target because they contracted directly with doctors and hospitals to provide health benefits and assume the risk of taking care of their employees. As a result, they have a greater incentive to manage health care costs than employers who work with a third-party payer, such as an insurance company.
This is no small thing. Health care spending nationwide increased more than 4 percent annually between 2010-2019, according to the Kaiser Family Foundation. It jumped more than 9% between 2019 and 2020 due to COVID.
This year, spending for coalition members has increased by about 6%.
For Harahan-based Laitram, that means nearly $30 million this year will go toward paying for health care for about 5,000 employees and their dependents from the company’s plan, said Frank LaBish, Laitram’s director of human resources.
For Baton Rouge-based Turner Industries, which has nearly 20,000 covered lives in the company’s plan, health care costs will reach about $100 million in 2022, according to Dan Burke, vice president of benefits at the industrial construction company.
Turner, which has already created its own health and wellness programs to try to keep its employees healthier, was the first company to join the coalition. Burke was actively involved in helping to expand the effort and attract other employers. He said it was important for big companies to work together to use their collective bargaining power.
“Employers have abdicated their responsibility in many ways because navigating health care is so complex and confusing,” he said. “That’s one of the things we’re trying to do through the coalition — bring more transparency so that employers understand what they’re paying for and how to evaluate providers.”
Collaboration is key
A variety of new online tools are making it easier to assess both the cost and value of health care delivery. Compiled from publicly available information such as Medicare and Medicaid cost reports that hospitals must submit to the federal government, the tools help employers evaluate the various providers in their market so they can make better purchasing decisions.
Suppliers say they want to be part of the conversation and are joining the coalition. So far, Ochsner Health and Baton Rouge General Hospital have signed on, with others believed to be interested.
Insurance companies, including Blue Cross and Blue Shield of Louisiana, are also getting involved. Meng said it’s important to have input from all stakeholders as they try to tackle the problem.
“We welcome suppliers to the table and insurance companies as well,” Munn said. “It should be an employer-led effort, but we want it to be professional, respectful and collaborative.”
Although the coalition’s initial focus will be on dialogue and education, one of the goals is to explore the creation of a close network of providers.
Some coalitions that have done so have curbed health care spending by 20-30% a year, according to Skisak. The California Healthcare Buyers Business Group is often held up as a model. Other notable examples are the Indiana Employer Forum, the Memphis Coalition, and the Washington Health Alliance.
The Houston coalition is still working on the list of providers that will participate when it launches its own network in 2024.
Part of the challenge with narrow networks, as their name suggests, is that they limit which providers can participate, which limits patient choice among doctors.
As much as patients and employers dislike rising health care costs, they often dislike being told they can’t go to their current doctor if that provider is not in network even more.
Coalition organizers acknowledge this is a potential problem, but say it’s the only way to control costs under the current US health care system.
“It’s hard to really save money if every hospital and doctor is included in your insurance plan,” said Cadence insurance benefits consultant Kerry Drake, who helped organize the coalition. “The savings come when employers can direct patients to a small group of providers who agree to accept less in exchange for more volume.”
One way to overcome the limited network obstacle is to create a tiered network that pays more of the bill if the patient goes to a preferred, high-value, lower-cost provider than an out-of-network doctor or hospital.
Referral pricing is another option where the employer agrees to pay a fixed amount for a given procedure or office visit and leaves the employee to shop around and find the best deal.
“But it throws your employees to the wolves, so it’s not necessarily something you want to do,” Burke said. “It’s an example of the kinds of things we’re going to be learning about and talking about.”
Policy and legislative advocacy are also important functions that coalitions can perform. In Houston, Skisak’s group is actively working on legislation that would require providers to make price data more readily available to employers.
“There are a lot of different things that can be done,” Skisak said. “This doesn’t happen overnight. But the coalition needs to be a collective with many employers speaking with the same message.”