Blog
June 28, 2024

2024 Executive Forum: The lowdown on drug pricing, “next best action” engagement and site-neutral payment reform

Kelly O’Reilly, President and CEO, Ohio Association of Health Plans

When I consider the complexity and unrelenting pace of change in the U.S. healthcare industry, it reminds me that helping our members cope with an avalanche of news and information is one of the most important things OAHP can do, and one of the best examples of that is our annual Executive Forum. This year’s event, held earlier this month, brought around 50 CEOs, medical directors, pharmacy directors and government affairs leaders together virtually to hear from industry experts on drug pricing, “next best action” techniques for plan member engagement and site-neutral payment reform.

Many thanks to Clarity Software Solutions for sponsoring the Executive Forum and sharing the latest on how to design member communications to yield greater engagement on a number of fronts.

For those who weren’t able to join, here are some quick highlights:

U.S. Drug Pricing — A 2024 RAND Study

We all know that consumers in the U.S. pay more for prescription drugs than just about anywhere else, but RAND Senior Health Economist Andrew Mulcahy, with a backstage tour of the eye-popping research he published in February, showed that the gap is getting worse and is significant even after you figure in the manufacturers’ rebates that make drug pricing so complicated here.

Comparing U.S. prices for a set group of medications to the average prices in 33 other high-income countries, the research found that U.S. prices are nearly triple — 2.78 times as high. That’s for all types of drugs; if you look only at brand-name drugs, it’s worse — U.S. prices are 4.22 times as high.

Another way to look at it: While the U.S. accounts for about 24% by volume of the drugs considered in the study, our share of the total spending is 64%.

One bright spot is unbranded generic drugs, for which prices in the U.S. are 84% of what they are in the other countries studied, thanks largely to generics and competition. Andrew called that “one of the few things that the U.S. healthcare system has exported to the rest of the world that actually does some good.”

In fact, although 90% of U.S. prescriptions filled are for generic drugs, generics account for only 10% of drug spending.

According to Andrew, it’s unclear what U.S. consumers get for spending nearly three times as much as the rest of the developed world on drugs. Though drug manufacturers often say high prices are necessary to pay for research and development of new lifesaving therapies, Andrew pointed out that R&D no longer happens exclusively in the U.S. and is increasingly global. (As a corollary, we have pointed out many times the fact that big pharma’s R&D budget is dwarfed by its advertising budget.)

Clarity Software Solutions

Drew Corbett, Clarity’s vice president of engagement and design, talked about the unrealized potential represented by the gap between the “mountains of resources” health plans have available for members and what actually gets used.

The key, Drew said, lies in smarter communication with members. Regulations require a whole host of contact points between plans and their members; Clarity aims to help plans get the most out of that required spend by piggybacking mandatory communications with additional messages tailored to be especially relevant to the member — a marketing approach known as “next best action.” Examples include, when new plan ID cards go out, attaching a sticker urging members to register for the online portal.

Explanation of benefits (EOB) forms often are what members see most regularly and thus offer the greatest opportunity for connection. An EOB for an emergency department visit is a great opportunity to urge the member to consider a less costly urgent care facility for future needs.

It’s not only good for member health outcomes, Drew pointed out; it also can save money and drive performance gains. “You’re paying for (the communication) anyway,” Drew said; “This really lets you do more with that spending.”

Hospital Facility Fees and Billing Transparency

United States of Care (USOC), a national nonprofit dedicated to engaging the public to set long-term change goals in healthcare policy, is committed to one of OAHP’s top priorities: site-neutral payment reform. We heard from Lisa Hunter, USOC’s senior director for policy and external affairs and Caitlin Westerson, director of state external affairs and partnerships.

While there’s good news in Ohio on that front (see below), Lisa and Caitlin focused on prospects for reform at the federal level to block the ability of health systems to inflate the cost of ordinary outpatient care by adding meaningless “facility fees” to such care when it is delivered, not in a hospital, but in an outpatient center owned by the health system.

The U.S. House recently passed the Lower Costs, More Transparency Act, which would establish site-neutral payments for administering drugs under Medicare Part B and would make facility fees easier to track and oversee by requiring all hospital outpatient departments to have a unique “national provider identifier number.” In the Senate, a bipartisan group of senators is sponsoring the SITE Act, which would override earlier legislation that allows facility fees at some outpatient settings.

Here in Ohio, the state Senate recently amended a bill on hospital price transparency with language that would bar extra fees at facilities that health systems acquire. The bill as it currently stands would not, however, bar the fees for facilities that health systems build from scratch — a provision we fear could wrongly incentivize more unwarranted building by health systems.

I hope everyone found the presentations as relevant to their work as I did. I know I’ll be drawing on them going forward. We’ve already shared slides from the Forum with those who attended. If you haven’t received them and would like to, drop us an email and I’ll be glad to send them your way.