Private Purchasers Of Health Coverage Join Forces to Align with Medicare's Shift to Value Purchasing

Private Health Care Purchasers Follow Medicare’s Reform of How Benefits are Purchased

    • July 18, 2012

Prominent national and regional business and labor health care purchasers are working together to change the way they and other private purchasers pay for health benefits to be based on the value—rather than the volume—of services delivered by health care providers. The groups say such a move will improve the quality of care people receive, while lowering health care costs.

The effort—known as Buying Value—takes advantage of major reforms in Medicare that are taking the largest purchaser in the nation towards value purchasing in its programs. It builds on the pioneering work of leading private purchasers of health care, including The National Business Group on Health, The Pacific Business Group on Health, The National Business Coalition on Health, Catalyst for Payment Reform, and the Consumer Purchaser Disclosure Project; individual companies such as GE, IBM, Xerox, and Honeywell; numerous local area purchasing coalitions such as the Maine Health Management Coalition; and unions such as UNITE HERE, The United Automobile Workers, AFSCME and the Service Employees International Union.

“Medicare’s shift toward value purchasing changes the entire landscape for purchasing health care, and promises that significant changes will be sustainable,” said Helen Darling, president and CEO of the National Business Group on Health, itself a major force in health care since 2001, driving improved quality and safety in health care through a committee of national employers focused on payment and delivery system reform and providing tools such as its Patient Safety Toolkit.

“Buying Value’s sponsoring organizations have been working independently to transform health care for a number of years," said Darling. “But with the nation’s largest and most powerful health care purchaser, Medicare, now joining us in that effort, the chances that value purchasing will rapidly spread throughout the health economy and among employers, health plans and health funds are much, much better today.”

Buying Value is a collaboration of 18 diverse organizations that either represent or are themselves large health care purchasers—including Fortune 500 corporations, union health funds, and national and regional business coalitions. National consumer organizations are also involved. Not itself a new organization, Buying Value will promote participation in existing purchaser groups.

The initiative is designed to encourage and assist private purchasers in making the switch from the traditional health care purchasing model of paying for care based on the number of individual tests or procedures performed, to a payment model based on the value or outcome of the overall care. The initiative will assist purchasers in working with health plans and promote direct connections with providers of care as part of the change to value purchasing,

Buying Value will assist private purchasers in aligning with the big change in the nation’s Medicare program in switching to value purchasing, a trail blazed by a wide variety of experiments funded by national foundation and private sector health care initiatives. By 2017, the Centers for Medicare & Medicaid Services will attach 9 percent of Medicare payments to some form of value purchasing.

In order to facilitate and simplify alignment between private purchasers and Medicare, Buying Value has secured Medicare’s commitment to support a common set of core measures for value purchasing in both areas. Development of the core measure set is underway at the independent Measures Application Partnership under a Medicare contract. The first phase of the project is due to be completed by October 1, 2012.

The importance of mirroring these changes in order to avoid the cost-shifting that will take place will drive the Buying Value initiative’s focus on aligning private purchasing practices with the Medicare payment reforms, as well as working with state health exchanges and Medicaid programs to do the same.

The organizations supporting the Buying Value initiative include:

  • American Federation of Labor-Congress of Industrial Organizations
  • American Federation of State, County and Municipal Employees
  • Consumer-Purchaser Disclosure Project
  • IBM
  • Maine Health Management Coalition
  • National Business Coalition on Health
  • National Business Group on Health
  • National Education Association
  • National Partnership for Women and Families
  • Pacific Business Group on Health
  • Patient Centered Primary Care Collaborative
  • Service Employees International Union (SEIU)
  • SEIU 32BJ Health Fund
  • UAW Retiree Medical Benefits Trust
  • UNITE HERE
  • UNITE HERE HEALTH
  • Xerox

Support for the effort is being provided by the Robert Wood Johnson Foundation, the nation’s largest philanthropy devoted exclusively to health and health care.

“Year after year, employers are faced with the recurring dilemma of having to spend more for health care that is already crushing their bottom line and requiring workers to contribute more of their wages,” said Andrew Webber, president and CEO of the National Business Coalition on Health. “In exchange for the increased cost, they do not see an increase in quality or value. The only solution is to restructure how we purchase our health care and what we get for our dollars. The Buying Value project will help purchasers nationwide make informed decisions when purchasing health care and designing benefits.”

The Buying Value project will develop a toolkit to help private purchasers rethink their health plans, as well as launch a public database showing different payment methods that purchasers can use to drive improvements in health care quality and safety. Organizers will also provide a suite of educational and presentation materials on the issues and offer guidance on avoiding antitrust issues present in active purchasing, a frequent fear of many when exploring new payment proposals. In addition to creating tools and resources that can be used by health care purchasers to guide their benefits plans, Buying Value organizers will conduct outreach at the local level to educate regional purchasers and consumer organizations.

“The costs of health care in the United States have risen to unsustainable levels for employers who purchase health care, as well as for patients and their families, without any complementary rise in the quality of the care being provided,” said Anne Weiss, team director and senior program officer at the Robert Wood Johnson Foundation. “Buying Value seeks to use the influence of private purchasers to reward health care value not volume, an idea that has been long in the making.”