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Updated: December 26, 2019 ECONOMIC FORECAST // HEALTH CARE

CT faces pressure to lower state health-plan costs in 2020

 

State Comptroller Kevin P. Lembo

Q&A talks to state Comptroller Kevin Lembo about efforts to lower healthcare costs at the state level as well as more broadly. He’s got pressure to make headway — Gov. Ned Lamont’s two-year budget requires Lembo and other members of the Health Care Cost Containment Committee to find ways to save $180 million over the biennium in efficiencies that don’t reduce worker benefits.

In 2019, your office announced a new pharmacy contract with CVS Caremark that involves over 200,000 government employees, retirees and dependents, calling it the “first of its kind” in the nation because it gives full line of sight into pharmaceutical costs. What is one of the most significant differences about the agreement and why does it matter?

This contract is a game-changer in the market. Typical contracts give employers little to no information about what they’re actually paying for, or what unknown financial arrangements exist between PBMs (pharmacy benefit managers), pharmaceutical corporations and pharmacies. This typical carte blanche to PBMs needs to stop. This contract is different.

Connecticut is calling the shots on prescription-drug costs and quality. Under our new contract, the entirety of all drug manufacturer payments to the PBM will be passed on to the state, and we will fully know and only pay the amount that the PBM paid each pharmacy for the cost of filling prescriptions with no added so-called “spread pricing,” the practice of PBMs charging plans more than what they paid.

In September, you put health insurers “on notice,” issuing a request for proposals that would give your office a seat at the negotiating table where insurers and providers decide reimbursement payments related to the state’s healthcare plan. How might we see this play out in 2020?

Employers across the country have long ceded control, responsibility and oversight of healthcare purchasing to health insurance corporations — but that old way of doing business has been broken for some time.

We are preparing for a new market-altering dynamic where the state will ensure that corporate healthcare interests are better aligned with the interests of patients, healthcare providers and the state of Connecticut health plan.

The state health plan, which serves approximately 210,000 lives of state and municipal employees, retirees and their dependents, is a self-insured plan, and contracts with Anthem and UnitedHealthcare to administer patient claims and negotiate reimbursement payments with healthcare providers.

My office is in the process of completing an RFP process. The most significant change we are preparing for is that the state will have a direct seat at the negotiating table where health insurance reimbursement payments are established between health insurer(s), hospitals and other healthcare providers.

Rather than deliver health care on terms negotiated between corporate interests alone, the state is demanding that the health care we pay for is driving quality up and costs down. In other words, we will not allow our contractors to pay for poor quality or duplicative unnecessary care.

We will build a healthcare payment system that rewards quality and efficient care and the best possible patient outcomes.

You’ve spoken in favor of Connecticut importing drugs from other countries, like Canada, to save money. What kind of savings might that achieve, and why is it so hard to get it done?

Change of this scale is hard because it would disrupt one of the world’s most powerful industries, but policymakers have a responsibility to lean in to this discomfort. Drug importation should be examined further.

Our country is now funding pharmaceutical innovation while the rest of the world is enjoying the benefit of those investments at a fraction of the cost.

The true savings and policy path to drug importation is something that will have to be investigated and analyzed further.

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1 Comments

Anonymous
January 2, 2020

Congratulations to both Management and Labor for finding solutions that lower the state plan claims costs. CT has been a leader with our Health Enhancement Program that links premiums to wellness activity. Negotiating rates with providers is a good next step.

But one warning; unless the new state deal is transparent and available to other self funded plans, the private sector may take a hit. If Hospitals lower rates for the State plan, will those same hospitals raise rates for all other self funded payers? If so, the state will achieve savings, but the costs will be passed onto the rest of us via higher premiums.

What would really help the state economy as a whole is for the private sector to get the same deal the state gets. That would lower both government and private sector health care costs, and help everyone and every business that is trying to stay in Connecticut.

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