BCBSA: 6 Policy Changes Could Save $767B in Healthcare Spending

In a report and briefing, Blue Cross Blue Shield Association (BCBSA) recommended policy solutions that could help bring runaway healthcare spending under control, saving $767 billion across 10 years.

“We know that the affordability crisis hits people every day, millions of people every single day, from the patient who can't afford their medication, to the employee who can't afford a trip to the doctor or struggles to pay for that,” David Merritt, senior vice president of policy and advocacy, said in a briefing on the affordability solutions.

“But we know with more competition, more choices, quite frankly, more collaboration among healthcare leaders, together we can address this rising healthcare costs. We also know that when the public sector and private sectors work together, we can effectively address this challenge…. So, that's why we're excited today to release this platform of solutions that can address these challenges head on.”

BCBSA leaders highlighted three instigators of high costs: hospital costs, prescription drug costs, and fee-for-service reimbursement.

The report recommended three solutions to address these challenges.

First, the payer found that improving provider competition could reduce costs and address the impacts of hospital consolidation.

BCBSA suggested expanding the current site-neutral payment policies. Under these rules, hospital outpatient providers cannot charge more than other care settings for service. The objective is to draw patients to lower-cost, high-quality care settings.

Boosting the budget of the Federal Trade Commission (FTC) budget could also help reduce hospitals’ anti-competitive actions, the report indicated. Congress could also extend the FTC’s authority to crack down on anti-competitive activity. Also, mandating appropriate billing could reduce unnecessary spending in response to billing or reimbursement errors.

Second, the payer organization introduced legislative and procedural opportunities to improve consumer access to lower cost prescription drugs.

As with its recommendations to counter anti-competitive practices among hospitals, the payer emphasized leveraging market forces in the effort to reverse escalating prescription drug prices. Specifically, BCBSA sought to amplify the role of generics and biosimilars to increase competition.

Legislative measures to reduce prescription drug spending should protect the health insurer-provider and health insurer-patient relationships. They should also seek to diminish direct-to-consumer advertising from pharmaceutical manufacturing companies. And lastly, they should employ federal funds to improve and increase comparative effectiveness research around prescription drug value.

Third, the report and BCBSA leadership emphasized the importance of ensuring care delivery at the right time and place.

Allowing payers to have greater flexibility in their telehealth services and modernizing prior authorization could improve affordability by expanding members’ options for low-cost, convenient care and supporting timely provider decision-making. Additionally, legislators could support better interoperability.

Continuing to develop and promote value-based care programs is another way that policymakers can reduce costs through improving access to care at the right place and time. Value-based care efforts endorse low-cost, high-quality care with an emphasis on preventive measures.

An accompanying report from Ellis Health Policy analyzed the cost effects of six BCBSA-proposed changes to existing laws.

The summary looked at the ten-year effects of the six policy alterations. The recommendation that achieved the highest cost savings was adopting site-neutral payment policies which would save a total of $471 billion. This approach would result in $231 billion in federal savings, $117 billion in private payer premium savings (or 0.75 percent), and $152 billion in savings on out-of-pocket healthcare spending.

The site-neutral payment policy far outstripped BCBSA’s other recommendations for policy changes in terms of savings. The runners-up included BCBSA’s suggestion to limit biological exclusivity periods, which would result in a total of $101 billion in savings, and to expand antitrust funding and enforcement, which would save $79 billion overall.

The remaining six options would result in smaller amounts of savings individually but could be powerful when combined. If enacted altogether, the legislative strategy could result in $767 billion in savings, including 1.9 percent private payer premium savings.

The recommendation to preserve drug benefit management tools could lead to $97 billion in savings, $84 billion of which would be in private payer premium savings. The policy suggestion that would have the biggest impact on private payer premium savings was preserving prior authorization. This step could result in 1.71 percent premium savings, or $268 billion.

These two recommendations together—preserving drug benefit management tools and prior authorization—would have a greater impact on premium savings than the six previous recommendations combined and would result in more than half of the savings total.