About half of Americans rely on the health care coverage they receive from their workplace. And while employers take their role in offering affordable, high-quality health benefits very seriously, they have historically been limited in their ability to scale widespread innovation or negotiate better rates for their own employee population.
Several factors contribute to this dynamic. To start, transformation typically doesn’t scale across the employer-sponsored insurance market in the same manner as Medicare and Medicaid. Even large employers (i.e., those covering more than 100,000 lives) can’t singularly drive systemic change for purposes of negotiating more affordable rates or improving care innovation. Second, our health care system’s financial incentives still largely reward the volume of services performed rather than quality of care provided, which drives cost growth without improvements to population health. This is an area where the employer-sponsored health care segment continues to lag. For example, 21 percent of commercial insurance payments in 2023 were tied to two-sided financial risk for improvements in health outcomes — compared to 43 in Medicare Advantage and 33 percent in traditional Medicare.
Collectively, employers direct $1 trillion each year to their health care offerings. It’s past time to purposefully leverage this purchasing power and articulate higher expectations when it comes to the quality of care that patients receive. A more concerted effort to tie payments to improvements in clinical outcomes or put fees-at-risk for performance targets are measurable ways to hold health plans, providers and point solution vendors more accountable for improving quality standards for patients.
But employers require more guidance and visibility to support this shift. Insights from a recently conducted series of interviews with employers underscored the importance of peer learning via open access to information around what worked or did not work when integrating financial accountability for health outcomes into the contracting process.
In that spirit of collaboration, Morgan Health, with our partners in JPMorganChase benefits, developed a roadmap offering actionable guidance for employers to better measure health care quality through five key steps:
Identify today’s improvement opportunities to set tomorrow’s quality goals. Understanding the current health status of the member population will help employers identify gaps in health care quality and needed interventions. For example, high levels of A1c (average amount of glucose) of a member population or sub-populations might lead to a goal of reducing diabetes prevalence.
Select measures based on your quality goals. Prioritizing ways to improve the quality of care can take multiple forms and is dependent on an employer’s respective population health needs. Measures like reduced hospitalizations, enhanced access to screenings and preventive care or improved provider scores all offer deeper visibility into how engaged patients are with their care, and in turn, the potential for downstream cost savings for employers.
Determine measure baselines and set targets. Accessing a patient’s longitudinal data may be difficult for a variety of reasons, including turnover or changes in benefits, but the use of national benchmarks can help employers establish measure baselines. Through tools like NCQA Quality Compass, employers can examine HEDIS benchmarks or evidence-based research studies as a proxy performance.
Establish performance payments that incentivize improvement on quality goals. Setting payment incentives or agreeing on fees-at-risk for performance is critical to establishing accountability for quality. Employers and vendors should discuss the best approach for the first year and align around the longer-term goals to help drive continuous improvement and trust.
Establish a timeline and process for calculating quality measures in contracts. While this may be commonplace for many employers today, it is important to document how baselines were set and how results are calculated. This ensures all parties involved in the contract are aligned on measure methodologies. Documenting methodologies are also particularly useful in the event of an audit, especially when quality measures in contracts are tied to financial incentives and accountability.
Innovations in care delivery are accelerating every day, and we need our payment models to keep pace. As large purchasers of health care, employers can work collaboratively to support the shift from volume to value across our system.