People shop for the best deal when it comes to so many products and services. So why is healthcare different? Part of the reason is that most things - cars, a loaf of bread, even health insurance itself - have a price tag. But when it comes to healthcare services, prices aren’t always available. When they are, researchers have been finding that the jury is still out on whether simply knowing what something costs encourages lower healthcare spending.
In the journal Health Affairs, researchers from Harvard Medical School, the University of Southern California, the RAND Corporation and Health Care Service Corporation, a Mutual Legal Reserve Company (HCSC), have found paying patients to choose lower cost services can make a difference.
Giving members the power to choose based on price and quality
The team of healthcare policy, economics and data scientists evaluated the impact of HCSC’s Member Rewards program on nearly 270,000 employees of 29 employers with health plans from HCSC. Members who use the company’s online ProviderFinder tool or reach out to a customer advocate can evaluate prices for 131 different elective services, like an MRI.
“Members can see quality and cost information, provider credentials, and even member reviews before choosing a provider,” says Tom Meier, Vice President of Market Solutions for HCSC. The tool, says Meier, can also estimate a member’s total cost for the service. “It calculates that cost based on the member’s individual plan, taking into account, for example, whether a member has met the deductible," or the amount of money a member pays out of pocket before a health insurance plan begins to cover costs. The idea, says Meier, is to encourage members to shop not only based on price but on quality. Patients who choose a designated lower-price provider will receive a check ranging from $25 to $500, depending on the provider’s price and service.
Motivated by the reward
Leanne Metcalfe, Ph.D., Executive Director of Research and Strategy at HCSC, helped author the study. “What we saw was that even after people met their deductible,” says Metcalfe, “they still shopped. They wanted that reward.”
Metcalfe says that about 8 percent of members included in the study used the tool, mostly for imaging services. Members and employers benefitted: every dollar the health plan paid a member for choosing a lower cost service was also deducted from the employer’s health insurance bill. In 2017, that translated into a savings of more than $2 million dollars for employers. Metcalfe says that number may sound small, but as the program expands, the savings go up. And that could bend the healthcare cost curve for employers and employees.
Awareness is key
Meier says HCSC goes beyond offering the program to ensuring members know about it and how to use it. “When members call customer service, for example,” says Meier, “they’re not typically calling for a quote on an MRI. They’re calling about a new ID card.” At that point, says Meier, customer advocates can remind members about the program. “We leverage every opportunity with that member,” says Meier, to let them know about the tool.
For Metcalfe, the takeaway of her research about HCSC’s Member Rewards program is clear. “Just having a price transparency tool isn’t enough. You need to give people an incentive to use it. That’s a win for the employee, for the employer, and, over time, should ease costs.”
Health Care Service Corporation is the country’s largest customer-owned health insurer and fourth largest health insurer overall, with more than 16 million members in its health plans in Illinois, Montana, New Mexico, Oklahoma and Texas.