A Tough Negotiator Proves Employers Can Bargain Down Health Care Prices

As head of Montana’s Employee Benefit Plan, Marilyn Bartlett negotiated uniform hospital and pharmaceutical rates, saving system from bankruptcy. What Bartlett achieved in Montana over a two-year period can be accomplished with relative ease nationally under a Medicare-for-All national health insurance model.   By Marsha Allen, NPR October 2, 2018.  Photo by Mike Albans for NPR.

Listen to or read the interview by Marsha Allen. 

Having run Montana's employee health plan that serves 30,000 employees and their families for two years, Marilyn Bartlett negotiated better deals with hospitals and drug benefit managers, bringing costs down and saving the plan from bankruptcy. She brought to heel a system fraught with kickbacks and secret lucrative clauses inserted by industry players that inflate costs to benefit insurers' bottom line, often at the expense of employer and employee costs. Bartlett negotiated a rate for hospitals in the state to equal a little more than twice the rate that Medicare pays. Rewritten contracts with hospitals also prohibited a practice called "balance billing," under which hospitals bill patients for whatever charges a health plan refuses to pay.

In the face of a system with greatly variable pricing for any given procedure, Bartlett's strategy used the prices set by Medicare as a benchmark, possible because Medicare makes its prices public, and adjusts them for hospitals based on geography and other factors. Montana's plan would thus pay hospitals a set percentage above the Medicare amout, a method known as "reference-based pricing," making it impossible for hospitals to arbitrarily raise their prices.

Bartlett also addressed the problem of Pharmacy Benefit Managers (PBM), middlemen contracted by health plans, who are notorious for writing deals that boost their profits at the expense of employers. Using a trick called the "spread," a pharmacy benefit manager will exaggerate the cost to fill a prescription, e.g., $100 instead of actual cost of $60, the benefit manager pocketing the extra $40. Some states' Medicaid plans cost them hundreds of millions for the spread on generic drug costs alone. Likewise, a PBM will often siphon off part or all of prescription drug rebates paid by pharmaceutical companies, instead of returning them to the paying health plan.

What Bartlett did for the state of Montana can be done with much more ease and efficiency under a National Public Health Insurance, Medicare-for-All model. Traditional Medicare is able to leverage economies of scale to negotiate global budgets for providers and hospitals, As head of Montana’s Employee Benefit Plan, Marilyn Bartlett negotiated uniform hospital and pharmaceutical rates, saving the system from bankruptcy. What Bartlett achieved in Montana, can be accomplished with relative ease nationally under a Medicare-for-All national health insurance model, avoiding Colorado's out-of-control hospital construction leading to the headline "Coloradans pay more as hospital building spree leads to empty beds and profits nearly twice the national average" – by one account increasing hospital revenues 76 percent from 2009 through 2016. (Denver Post, October 4, 2018) 

Reviewed by Michele Swenson

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