The Employer Coalition of Louisiana, as the group is called, plans to officially launch next year. Six employer members have signed on so far, including: Laitram, Edison Chouest Offshore, Excel Group—a large 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 what local doctors and hospitals charge for their services 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 steer the employees and dependents they insure to a limited group of doctors and hospitals, who would reduce what they charge for care in return for guaranteed patient volume.
The coalition is in its early stages, but it represents the latest effort by large employers to bend the trajectory of rising health care costs.
Others in the U.S. have tried it with varying degrees of success, including the Houston Business Coalition on Health, whose 30 employers represent some 1.8 million covered lives. That organization, which is 10 years old, hasn't been able to move the needle yet on lowering costs, its executive director Chris Skisak said. But it is planning to create its own network in 2024.
"This takes a while," said Skisak. "But the important thing is for employers to band together and start working on it, or nothing will change."
A Common Concern
The coalition came out of a COVID-era strategic planning session of a nonprofit organization in Baton Rouge 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 something we should we be focused on?" said Cindy Munn, CEO of the forum. "It was unanimous that they were struggling with the cost of health care and wanted help lowering costs."
Over the next two years, the forum began building a business-based coalition.
Large, self-insured companies were an obvious target because they contract directly with doctors and hospitals to provide health care benefits and assume the risk of underwriting their employees' care. As a result, they have a greater incentive to manage health care costs than do employers who deal with a third-party payer, like an insurance company.
That's no small thing. Health care spending nationwide increased by more than 4 percent a year between 2010-2019, according to the Kaiser Family Foundation. It jumped more than 9 percent between 2019 and 2020 due to COVID.
This year, costs for coalition members have gone up around 6 percent.
For Harahan-based Laitram, that means nearly $30 million this year will go to paying for health care for some 5,000 employees and their dependents on the company plan, said Franck LaBiche, Human Resources Director at Laitram.
For Baton Rouge-based Turner Industries, which has nearly 20,000 covered lives in its company plan, health care costs will come to around $100 million in 2022, according to Dan Burke, vice president for benefits at the industrial construction company.
Turner, which has already created its own inhouse health and wellness programs to try to keep its employees healthier, was the first company to join the coalition. Burke has been active in helping grow the effort and to attract other employers. He said it's important for large companies to work together to leverage their collective bargaining power.
"Employers have abdicated their responsibility in many ways because navigating health care is so complicated and confusing," he said. "That's one of the things we're trying to do through the coalition—bring greater transparency so 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 costs and the value of health care delivery. Compiled from publicly available information like Medicare and Medicaid cost reports, which hospitals must submit to the federal government, the tools help employers evaluate the different providers in their market so they can make better buying decisions.
Providers 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, and others have suggested they are interested.
Insurance companies, including Blue Cross and Blue Shield of Louisiana, are also getting involved. Munn said it's important to have input from all stakeholders as they try to address the problem.
"We welcome providers to the table and insurance companies, too," Munn said. "This has to be an employer-led effort, but we want this to be professional, respectful and collaborative."
While the coalition's early focus will be on creating a dialogue and on education, one of the goals is to explore creating a narrow network of providers.
Some coalitions that have done that have curbed health care costs by 20-30 percent a year, according to Skisak. The Purchasers Business Group on Health in California is often seen as a model. Other notable examples are the Employers Forum of Indiana, the Memphis Coalition and the Washington Health Alliance.
The coalition in Houston is still working on the list of providers that will participate when it launches its own network in 2024.
Limited Choice
Part of the challenge with narrow networks, as their name implies, 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 even more being told they cannot go to their current doctor if that provider isn't on the network.
Coalition organizers acknowledge that's a potential problem, but say its one of the only ways to control costs under the current U.S. health care system.
"It's hard to really save money if every hospital and doctor is on your insurance plan," said Cadence Insurance benefits consultant Kerry Drake, who has helped organize the coalition. "The savings come when employers can steer patients to a small group of providers, who agree to accept less in return for more volume."
One way to get over the hurdle of a limited network is to create a tiered network, which pays more of the bill if a patient goes to a preferred high-value, lower-cost provider than an out-of-network physician or hospital.
Reference-based pricing is another option, in which an employer agrees to pay a flat amount for a given procedure or office visit and leaves it up to the employee to shop around and find the best deal.
"But that kind of throws your employees to the wolves, so that's not necessarily something you would want to do," Burke said "It's an example of the types of things we will be learning and talking about."
Policy and legislative advocacy are also important functions coalitions can play. In Houston, Skisak's group has been active in working on legislation that requires providers to make pricing data more readily available to employers.
"There are lots of different things that can be done," Skisak said. "It's not an overnight thing. But a coalition has to be a collective with many employers speaking with the same message."
(c)2022 The Advocate, Baton Rouge, La. Distributed by Tribune Content Agency, LLC.
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