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Supply Chain Sausage (PDF)

"The simple idea that greater purchasing volume lowers producers' per-unit costs thereby permitting price discounting is the foundation of employer health care group purchasing organizations.... You would think that would mean hospitals would contract with specialized group purchasing organizations (GPOs), pay their annual membership fees and obtain savings from the GPOs' negotiated volume discounts on drugs and supplies for inpatients. But ... it doesn't seem to work that way at all ... [and] hospital GPO practices may be a root cause for the increasing cost our plans pay for the drugs that are administered to inpatients as well as the chronic shortages of inpatient drugs."

Keeping Healthcare Costs Sustainable: Efforts Continue (PDF)

"Provider consolidation is on the rise ... The weakness is variability in provider price and quality. The strategy to capitalize on provider variability is to get plan members to seek care from those providers with the least cost and highest quality. Plan management techniques that promote value-seeking by plan members are transparency and reference-based pricing.... To make a dent in total plan expense, we have to match up the primary source of plan costs, our plan members with expensive, complicated conditions, with expert, value-oriented providers. We need to identify those limited groups of providers who have validated quality (not just skill, but who also work in a value-oriented practice model) and are willing to agree to bundled pricing."

Final Forms for ACA Reporting Released

"For calendar year 2016, forms are required to be filed with the IRS by Feb. 28, 2017 (or March 31, 2017, if filing electronically).... Individual statements for the 2016 calendar year must be furnished by Jan. 31, 2017.... The 2016 forms and instructions are largely unchanged from 2015 versions. Most of the changes were made to provide additional clarification, rather than make substantive revisions."

Follow the Money: Connecting Employee Income and Health Plan Costs

"A [recent study] reveals that income matters in healthcare ... [T]he relationship between income and health is gradient: income and health are connected stepwise at every level of the economic ladder. Middle-class Americans are healthier than those living in or near poverty, but they are less healthy than the upper class. Even wealthy Americans are less healthy, on average, than those Americans with even higher incomes."

Outsourcing the Baby with the Bathwater? (PDF)

"Since outsourcing is a staple of benefits management, we should keep in mind that the cost/benefit analysis of outsourcing opportunities should not be limited to comparing a vendor's fees to your gains from staff re-deployment, or your savings from staff reduction. There may be other costs inherent in outsourcing some functions, including ones we've long-since outsourced.... [B]enefits managers may, without really thinking about it, cede authority over strategic and cost-sensitive subjects to vendors that were seen primarily as providing administrative-only services."

It Is Well with My Soul (PDF)

"[S]ince we're all gonna die, what can employers do to make a positive difference? ... A very large company, one with 25,000 or so employees, can expect 40-50 deaths annually. A mid-size company, say one with 2,000 employees, can expect on average about 4 deaths, with one or more from cancer.... We go to great lengths to help our plan members save for retirement and provide investment education to maximize the utility of our 401(k) benefits. We should do no less to prepare our plan members for what else comes naturally after retirement, and (at least for some family members and unlucky employees) during our working years."

Confronting Consolidation (PDF)

"Aetna, Humana, Anthem, Cigna, they're all in merger/acquisition mode. Pharmaceutical manufacturers continue to merge ... Just two PBMs now control two thirds of the employer-sponsored prescription drug market.... So where does all this healthcare consolidation leave your corporate health plan? Probably not in a good place when it comes to patient access, provider choice, price competition and appropriateness of treatment.... [H]ow are plan sponsors going to protect themselves and their plan members from the increasing market power of the major healthcare players? ... Enter the U.S. Federal Trade Commission (FTC), whose role it is to protect consumers from anti-competitive practices."

Making the Price Right (PDF)

"[M]aybe we just have to come to grips with the permanently pivotal role the provider is going to play, not only in setting prices but in effectively deciding whether, what and where treatment is delivered.... Being judicious health care consumers is not easy, and the NEBR and McKinsey studies reinforce the fact that providers are the key players in the price/cost nexus ... We aren't about to get in between the patient/doctor conversation, but we can educate the former and influence who is the latter."

PBM Pricing: Do Diligence! (PDF)

"The standard contract typically allows the PBM discretionary authority to choose and change pricing references, which drugs are on the formulary list and their tier placement, all of which impact your plan's cost. The task is ... to know the cost implications of the contract provisions that favor the PBM.... Plan sponsors should ask if the PBM is using the same [Maximum Allowable Cost (MAC)] list with the plan sponsor as it does with its network of pharmacies, and if the PBM uses the same pricing in retail and mail service. Ask for a copy of the MAC pricing list. Plan sponsors should also insist that the MAC list the PBM provides in the RFP process is the one it actually uses once the contract is signed."

On Dynamic Pricing of Health Care (PDF)

"Using customer value as an element to set the price for a good or a service has been around forever. But rarely has it been a component in the design of our healthcare plans. Our healthcare plans are essentially mechanisms that reimburse providers' charges, which are a function of many factors, like expertise, procedure complexity and overhead ... minus some form of agreed-upon discount. Cost-effective value to the patient is not an explicit consideration in determining how much our plans will pay."