Viewpoint

Health Care Needs the Real Triple Aim

Price transparency, payment reform, and consumerism are needed to bring market forces to health care. Too many managed care organizations are comfortable with the status quo.

François de Brantes
Remedy Partners

Policymakers have long regaled us with cute catchphrases as a way to engage us in their policies. From former HHS Secretary Mike Leavitt’s four pillars to CMS Administrator Donald Berwick’s Triple Aim and to current HHS Secretary Alex Azar’s four priorities, we go back and forth between patient-centeredness, value-based care, quality, transparency, and interoperable medical records.

The core ingredients may not change much, but the emphasis does. As a result, the health care industry bobs and weaves from one priority to the next. In the meantime, prices keep going up.

So let’s cut to the chase and focus on the three elements that are essential for any market to function. First, buyers and sellers need to know up front the price of the goods or services being exchanged and have some information about the relative quality of those goods and services. Second, each party must have a clear economic incentive that results in the quantity of supply determined by actual demand. And, finally, prices are set by an equilibrium between demand and supply whereby demand is sensitive to price changes.

In some parts of the health care sector—namely, those with more retail dynamic—those principles hold sway and have been brought about by the forces of consumerism. Consider the retail clinics in pharmacies and superstores, concierge primary care, “Uber” physicians coming to homes, telemedicine for routine sick care, and so on. They have emerged and proliferated because of the forces that govern any market in which the consumer pays the actual price for the services—not an inflated price that is subsidized by a third-party payer. Those forces also create circumstances that bring about convenience, increase quality, and lower prices. To some extent, the proposed acquisition of Humana by Walmart and Aetna by CVS are also a result of these forces.

But in large swaths of the health care sector—the portion where the vast majority of the dollars are spent—those forces are feeble or nonexistent.

They don’t have to be.

Consider the extensive evidence that reference-priced benefits achieve results similar to those in the retail market. CalPERS, the largest private sector purchaser of health care services in California, has been implementing these programs since 2010 and has created a true market for a number of high-cost procedures. Similarly, employers throughout the United States are now creating local “centers of excellence” for specific procedures and tying strong incentives for their employees to seek care there. Those centers are also accepting global fees for the selected procedures, capping the employers’ liability.

These successful experiments have three common attributes. They reveal the price and quality of health care services, they transform the payment to providers from fee-for-service to case rates, and they engage consumers by making them responsible for a portion of the costs of care above the target price.

So why aren’t these attributes of a functional market adopted more widely by managed care organizations? Because it is massively disruptive and too many MCOs are comfortable with the status quo.

Many of the providers in their networks are also comfortable and have found ways to protect themselves. One increasingly common method is to include non-steerage clause contracts. Another is to buy up all the physician practices in sight and create local oligopolies. They’ve erected fortresses, but history has taught us that every fort can be taken down.

The payers for the health care of the active and retired workers of the United States want the real triple aim of price transparency, payment reform, and consumerism. They are amassing the forces that can—and will—level the barriers to more affordable health care.

Managed care plans should embrace it—or risk losing to another cause with public and political support: A single-payer health care system where prices are controlled by the government.

François de Brantes is the senior vice president of the commercial group of Remedy Partners in Norwalk, Conn.

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