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Price Transparency Key Issue Among Health Payers and Employers

Both patient engagement and price transparency continue to drive the topic of conversation regarding healthcare reform.

By Vera Gruessner

The movement toward price transparency is gaining strength as healthcare reform continues to stress consumer and patient satisfaction. Employers have been seeking ways to improve price transparency for their employees when working with partnering health insurers. For instance, Shaw Industries, a flooring company, has been enhancing price transparency within the healthcare shopping experience for their employees with the help of Change Healthcare.

Patient Engagement and Price Transparency

Price transparency for healthcare cost reduction

Research has shown that greater price transparency could lower healthcare spending. For example, a report from the Health Care Cost Institute shows that better price transparency that allows consumers to shop for non-urgent medical services provides a “modest effect” on reducing healthcare spending.

With 7 percent of medical spending paid out-of-pocket by consumers, it stands to reason that some costs would be reduced if there was more opportunity to shop around for more affordable products and services. This 7 percent constitutes more than $27 billion, which could be reduced with greater price transparency, the report found.

Devon Herrick, Senior Fellow at National Center for Policy Analysis, spoke with about his support of price transparency as a way to reform our current healthcare system.

“We can create a better set of incentives to encourage providers and patients to actually talk ahead of time and have more price transparency, allowing patients to compare prices,” Herrick explained. “The research shows when people are told they need an MRI or a lab, if their cost-sharing is high, a lot of people don’t really understand that prices vary. What they often do is say, ‘I can’t afford that’ or ‘I won’t pay that’ whereas if they just look around, they could find that service at a lower price.”

“Most people don’t have any idea where to start. I comparison shop. I know that an MRI might cost $340 in one location and $3,000 in a hospital. But a lot of folks don’t know that. Anything that public policy can do to encourage more price transparency would be very beneficial,” Herrick concluded.

To learn more about how Shaw Industries is working toward boosting price transparency at their organization, spoke with Mindi Craig, Director of Health & Wellness Benefits at Shaw Industries.

When asked what steps her organization has take to improve price transparency for employees, Craig answered, “Our chief staff has partnered with a vendor called Change Healthcare to expose our members, associates, and their family members to the differential range of prices in the market.”

“I think we quickly began to understand that our people felt like going into network was good enough and didn’t really grasp that  there was a variation in price within network - that that wasn’t enough. So we partnered with Change Healthcare to present that cost range and quality data to our people directly and proactively,” said Craig.

Health insurance companies can also create more drive toward price transparency among their consumers by highlighting the costs of common medical services in their policyholder’s local neighborhoods. Craig discussed her organization’s relationship with their health payer and how the payer could strengthen their communication channels.

Regarding how payers can improve their relationship with employers, Craig explained, “I think, generally, having that visibility and the knowledge is important. Today, what we hear most as far as someone going through the claims experience, is if we try to ask about cost, my doctor's’ office doesn’t know, they refer me to billing or they say, ‘Well, you have insurance, don’t you?’”

“At Shaw, we have high-deductible consumer health plans, so just having insurance may not be enough and may not give you enough to cover your cost,” Craig continued. “So I think, generally, being more open and transparent about pricing and having awareness where people begin to ask questions and bringing that openness from the providers’ offices all the way up through the payer is necessary.  We really need that openness from the provider’s office all the way through the processing. It starts with our people knowing to ask questions.”

Patient engagement needed for price transparency

Patient engagement is another vital part of the movement toward better price transparency, as consumers who are engaged with their healthcare experience are more likely to comparison shop and determine the best service for their needs at an affordable price.

Currently, there are multiple systems being set in place to boost patient engagement. Providers are investing in mobile health technology and encouraging patients to implement mHealth tools to track medications and wellness initiatives in order to boost patient engagement.

When asked about how Shaw Industries has been using patient engagement to increase savings, Craig responded, “We really see a two-fold strategy. Step one is awareness and step 2 is savings or change. The first thing we want to make sure we do is to make people aware. Change Healthcare has been a very effective partner in that. It is different from other partners we looked at in the market.”

“It is about outreach. It is not just about looking up cost but it is actually interactive in that Change Healthcare reaches out to me when I could have done something differently if that would be a service I’m likely to repeat. They let me know how I could have saved money,” continued Craig.“That awareness that we create through this partnership is really our number one goal.”

“Secondly, at that point I’m presented with a decision, and I may say I don’t want to save $50 to change pediatricians. We like our pediatrician and we don’t want to compromise the relationship, but I now know that I’m paying $50 more every time we go for a visit. In some cases that second part, I will accept that change. I may realize that this CT scan could be $500 less two blocks down the street,” Craig pointed out. “What we have begun to see in the more recent time period is that people are beginning to make those changes and to make better cost decisions.”

Craig also discussed the necessity of price transparency for consumers and the healthcare industry at large, explaining that it goes above and beyond mere patient satisfaction.

“We haven’t looked at the length of satisfaction. What we see is that patient engagement tools are a necessary partner to any company that’s moving towards consumerism. We feel that if we’re going to ask you to price shop and be a healthcare consumer, then we have to provide you the tools,” she explained.

“There’s really a gap in the market. You can’t just look at the price tag like you do in any other consumer experience. In healthcare, you’re often surprised after you’ve had the service when you get your bill. Patient engagement tools are not as much about satisfaction as more of a necessity for a consumer health plan,” concluded Craig.


Dig Deeper:

Communication, Cost Transparency Impact Patient Engagement

Patient Engagement Cuts Healthcare Spending among Payers


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