Marilyn Bartlett might be the closest thing health policy has to a folk hero. A certified public accountant who barely tops 5 feet, Bartlett bears zero resemblance to Paul Bunyan. But she did take an ax to Montana鈥檚 hospital prices in 2016, stopping the state鈥檚 employee health plan from bleeding money.
鈥淢arilyn is not a physically imposing person,鈥� said Montana Board of Investments Executive Director Dan Villa, who worked closely with Bartlett in state government. 鈥淪he is a blend of your favorite aunt, an accounting savant and a little bit of July Fourth fireworks.鈥�
Bartlett, whose faith in data borders on fervent, hauls binders full of numbers everywhere she goes. 鈥淢y focus has always been following the dollars,鈥� she said. 鈥淵ou鈥檝e got to roll up your sleeves and get down to the nitty-gritty detail, especially in health care.鈥�
Bartlett鈥檚 success in Montana saved the state more than $30 million in three years by pegging hospital prices to a multiple of what Medicare pays. Now, she is an in-demand adviser to states, counties and businesses all trying to control health care costs. But as she鈥檚 hit the road, binders in tow, she鈥檚 found it difficult to replicate the Montana solution.
A Montana Miracle
Bartlett earned her reputation as administrator of the Montana state employee health plan, a role she assumed in 2014 as the plan hurtled toward insolvency. As Bartlett dug into the data, she discovered hospitals were charging the state as much as what they charge Medicare, the federal insurance program 鈥� for exactly the same services.
Historically, the state had accepted the seemingly arbitrary prices set by hospitals. Bartlett, staring down a $9 million shortfall, knew that had to change. She wanted the state to start dictating the rates they were willing to pay, but she needed a benchmark first.
She turned to Medicare. Unlike most payers, who bury prices in secret contracts, Medicare makes its payments public. Bartlett borrowed those rates and then more than doubled them 鈥� to 234% 鈥� knowing that hospitals often complain Medicare pays too little. This new kind of contract, known as reference-based pricing, was among the first attempted at this scale.
Bartlett expected the hospitals to chafe at the offer, but with Montana鈥檚 plan insuring 30,000 people, more than any other employer in the state, she had the upper hand. Despite what Bartlett described as 鈥渧ery, very tense鈥� negotiations, all the state鈥檚 hospitals signed on.
Five years later, the state health plan regularly runs in the black. Villa, who was former Gov. Steve Bullock鈥檚 budget director, said governors dip into the plan鈥檚 reserves to fill budget gaps. 鈥淚 now refer to the state health plan as the ATM,鈥� he said.
The Player Becomes the Coach
Montana鈥檚 success became a small sensation, at least in health policy circles. Now, one big question remains 鈥� the same one that has deflated the highest hopes of so many health care leaders. Can it be replicated?
Many of the country鈥檚 employers are desperate to find out. Their costs have in just the past decade. Employee spending on health care is also on the rise, . Leading economics researchers point to as a key culprit.
Since retiring from Montana state government in December 2019, Bartlett said she has spoken at numerous conferences, given hours of free advice, and answered a seemingly endless stream of calls.
One of the first calls came from Trish Riley, executive director of the National Academy for State Health Policy (NASHP). Riley hired Bartlett in 2019 to serve as 鈥渁 coach, cheerleader and mentor鈥� for officials from dozens of states trying to cut costs, including New Jersey, which passed a bill in 2020 the state鈥檚 health coverage for teachers and estimated to save the state $30 million annually.
Bartlett is also advising regional business coalitions stretching from Houston to Maine and seeing early signs of progress.
In Colorado, Bartlett is coaching , including city, county and state health plans, that have come together to negotiate with hospitals. The group recently notched its first win, signing one hospital to a Medicare-benchmarked contract.
In Indiana, Bartlett is advising the , a coalition that insurer Anthem to renegotiate its contract with a notoriously expensive health system.
Bartlett is even shaping legislation, including recent failed attempts in the to more broadly control hospital prices and in the to increase transparency.
鈥楢 Hard, Hard Thing to Tackle鈥�
Bartlett has learned over the past five years just how difficult her model is to export. 鈥淚t鈥檚 a hard, hard thing to tackle,鈥� she said.
Opposition from hospitals is often fierce. In Montana, the deal Bartlett negotiated has actually boosted some hospitals鈥� bottom lines, but the Montana Hospital Association still criticizes it. MHA President Rich Rasmussen faults the contract for focusing on prices and largely neglecting issues of quality and access. 鈥淚t doesn鈥檛 connect all the dots,鈥� he said. Rasmussen also argued Medicare rates are an 鈥渋nadequate鈥� starting point for negotiations because they fall short of covering the full cost of care.
That opposition pales in comparison to what Bartlett has seen crisscrossing the country. 鈥淲hat I faced in Montana was nothing like North Carolina faced,鈥� she said, her eyes widening as she described the sheer of the 鈥渕ega systems鈥� she encountered while advising North Carolina officials.
North Carolina鈥檚 plan to pay hospitals roughly twice Medicare rates in 2019 after just five hospitals agreed to the deal and several giant health systems refused to budge.
Bartlett understands that, as a result of , more states face hospital landscapes like North Carolina鈥檚, with its , than Montana鈥檚, with its more than 40 rural hospitals. And the insurance industry nationwide also is , leaving employers with fewer alternatives.
Saying No to Employees
For employers to have any chance at the negotiating table, Bartlett said, they must be willing to make tough calls. In practice, that might mean dropping a hospital that delivered an employee鈥檚 twins or a surgeon who cured a CEO鈥檚 cancer. 鈥淭hat鈥檚 pretty damn hard,鈥� she acknowledged.
鈥淓mployers don鈥檛 want to disrupt their employees鈥� care,鈥� said Elizabeth Mitchell, CEO of , which represents Fortune 500 companies like Walmart and Microsoft. 鈥淚t takes a lot of fortitude to carve a marquee-brand hospital out of a network.鈥�
A 2020 KFF found only 4% of employers had dropped a hospital from a network in order to cut costs. (KHN is an editorially independent program of KFF.)
Bartlett is quick to remind cold-footed employers that continuing to contract with expensive hospitals and doctors has a price, too. 鈥淵ou鈥檙e going to disrupt members when they get less and less benefits and pay more and more,鈥� she said. High health care costs also eat up wage increases in the private sector and school funding in the public sector.
Will Covid-19 Be a Catalyst?
Bartlett鈥檚 work has hit a crossroads during the pandemic. It is harder to criticize hospitals and their business practices as they play such a vital role. Meanwhile, employers and workers are hurting financially.
鈥淢any large employers are facing economic pressures they frankly haven鈥檛 had for a while. They鈥檙e laying off tens of thousands of employees,鈥� said Mitchell. 鈥淭here鈥檚 a new sensitivity to costs.鈥�
Bartlett sees an opportunity and is hustling to help employers meet it. She has teamed up with researchers at Rice University on a NASHP project called the Hospital Cost Tool.
鈥淚t breaks open this black box and lets you ask where these dollars are going and why,鈥� said Riley of NASHP. The tool aims to automate the kind of forensic accounting of hospitals鈥� finances that Bartlett had been doing on a one-off basis.
鈥榊ou鈥檙e Not Going to Be Liked鈥�
There鈥檚 one final test Bartlett has tried to prepare employers for 鈥� one for which numbers won鈥檛 help. It鈥檚 the personal toll that comes with challenging the status quo.
While working for the state health plan and before her work delivered results, Bartlett lost close friends, was cut out of meetings and even discovered her co-workers had created a Facebook group to criticize her. 鈥淵ou鈥檙e not going to be liked. You鈥檙e going to be ridiculed.鈥�
She reminds employers they have a moral and fiscal duty.
鈥淭he reality is this is hard work, and it became harder than I ever anticipated,鈥� said Bartlett. 鈥淏ut employers have been given this money, by the taxpayer, by the member, for these benefits. They are responsible for every penny spent. You can鈥檛 turn your back on that.鈥�
In Montana, the premiums and copays state workers pay have not increased a single cent since Bartlett and colleagues renegotiated with the hospitals. Over that same time, the average premium paid by American families with employer-based insurance .
Dan Gorenstein is the creator and host of the podcast and Leslie Walker is a senior producer on the show. Their Feb. 18 episode profiles employers鈥� efforts to purchase health care in new ways.