Featured in Health Business Daily, Feb. 21, 2018

Employer Alliance Launches Contracts to Tackle Health Costs

A longer version of this article was published in the Feb. 19, 2018, issue of HEALTH PLAN WEEKLY. Subscribe today for more strategic business, financial and regulatory analysis of the health insurance industry.

Feb. 21, 2018

Health Transformation Alliance (HTA), a nonprofit cooperative, launched group contracts with managed care companies and PBMs to cover 7 million employees, dependents and retirees starting Jan. 1, 2018.

HTA is comprised of 46 large self-funded companies that together spend about $27.5 billion annually on health care. It is expected to save at least $600 million in total over the three-year contracts with PBMs CVS Health Corp. and UnitedHealth Group’s OptumRx. On the medical side, HTA offers what it describes as networks of select, high quality providers and uses UnitedHealthcare and Cigna Corp. to administer the value-based networks.

Former congressman Robert Andrews (D-N.J.), the alliance’s CEO, says his group goes beyond sharing best practices. “I don’t know of any other employer coalition buying health care,” he says. “We’re a business that operates in order to provide better health results and savings, and we finance the operations of our cooperative through those savings.”

HTA negotiated the contracts with CVS Health and Optum, yet whether to participate is up to the members. If they do, they could modify the template “and do what they like,” he says.

Andrew says his group will also provide data to IBM’s Watson Health to identify the most effective treatments. Looking forward, HTA’s next step is to find the “best drugs” for specific conditions. “We’re working on making a tool available to all members for doctors to see information on the patient and the relative efficacy of the drug,” he says. On the medical side, HTA is looking at pre-diabetes care, making telemedicine work better and offering reference pricing programs.

Jay Godla with Strategy&, PwC’s strategy consulting practice, sees promise in HTA’s approaches, yet he also notes they are not transformative. “None of this is new. [W]anting to cut waste, break the bad habits of individuals…all those things are great and they will get there, but it’s a journey,” he says.

Godla suggests that HTA could negotiate with the top five drug manufacturers directly and initiate an alternative distribution chain to get eliminate some waste in the current wholesaler/retailer model.

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