Providing a financial reward for people to look up the cost of a medical test or procedure and then shop around for their care represents what one expert calls “the next frontier” in the push for price transparency in health care.
Under the new PriorityRewards initiative, anyone enrolled in a Priority Health policy can now look up the cost of more than 300 elective medical procedures or diagnostic tests. If they choose to go to a care provider offering a price at or below “fair market,” Priority Health members will earn a financial reward via a Visa gift card of $50 to $200.
While many health plans now offer some form of calculator or tool for enrollees to estimate the cost of an upcoming medical test or procedure, PriorityRewards adds a new element to the growing transparency movement, said Francois de Brantes, executive director of the Newtown, Conn.-based Health Care Incentives Improvement Institute that publishes an annual report card on price transparency in health care.
Serving much the same way as incentives built into wellness plans to encourage employee participation, financial rewards can help make cost calculators become a common aspect of health benefits, de Brantes said.
“What it’s doing is starting to move these types of tools into the fiber of benefit design, and that is the next frontier,” de Brantes said. “We’ll see a very, very rapid development of consumer-based tools over the next three to four years.”
Priority Health launched PriorityRewards this summer for use either online or through a mobile app for all commercial, fully-insured policies. The initiative comes at a time when an increasing number of consumers are enrolled in high-deductible health plans and paying more out of their own pocket for care.
By offering consumers a cost calculator and providing rewards for using it, Priority Health seeks to drive consumerism in health care and enable people to make better decisions on when and where they access care, said Chief Marketing Officer Joan Budden.
The ultimate goal remains to drive down the cost of health care.
“The end game is to get consumers engaged in their health,” Budden said. “This is just one initiative or aspect of us doing that and making sure consumers ask — when their physician recommends a test or a procedure — ‘Why am I getting this? What does that procedure achieve? What does that procedure cost and what are my choices of providers?’”
Priority Health started its transparency push in 2013 when it partnered with Health Care Bluebook, a Brentwood, Tenn.-based company that publishes price and quality data on care providers online. Priority Health uses the Healthcare Blue Book data to gauge fair market prices and to offer enrollees information on quality and reviews of care providers.
An insurer with more than 620,000 members statewide, Priority Health followed up with the launch early this year of a cost calculator that allows enrollees to estimate the out-of-pocket cost for a medical test or procedure based on their benefits package and the co-pays and deductibles built into it.
From a business perspective, providing rewards to members that use the cost calculator can help to differentiate Priority Health in the market, Budden said.
“We think that’s what’s great about competition,” she said. “You have to have somebody pushing the edge, or that edge becomes so soft and you never get anywhere.”
Budden did not have data on how the cost calculator and rewards program have affected care decisions by members, saying it’s too early to tell. From July 1 through mid-August, the calculator’s use grew 30 percent for people looking up pricing information for what Budden calls “rewardable” procedures.
Covered procedures include colonoscopies, sleep studies, MRI and CT scans, ear tubes, cataract surgeries, lithotripsy, knee and shoulder arthroscopy, total hysterectomy, and total knee and hip joint replacement.
Priority Health hopes that price transparency not only makes people better consumers of health care but also influences the wide disparities in the cost for many medical tests and procedures, even within the same market.
The health plan, for example, cites the cost for knee arthroscopy surgery in West and Southwest Michigan that in 2013 ranged from $1,279 to a high of $11,131. A colonoscopy costs anywhere from $579 to $3,061, and a sleep study ranged from $827 to $4,243, depending on the care provider or facility.
In January, Blue Cross Blue Shield Association — representing 37 independent Blues plans across the country — issued a report that highlighted wide variances nationally within selected markets, including West Michigan, in the cost of knee and hip replacement surgeries.
In the Grand Rapids-Muskegon market, the cost for total knee-replacement surgery varied 94 percent, from a low of $19,456 to a high of $37,840, according to Blue Cross Blue Shield Association. Total hip-replacement surgery in the market ranged from $18,294 to $38,640 for a cost variance of 111 percent, which was the ninth-largest variance in the nation.
Priority Health plans to expand the rewards initiative in the future to Medicare and Medicaid policies, add more tests and procedures to the price database, and add additional quality data for providers, Budden said.
De Brantes gives Priority Health credit for offering financial incentives to drive use of the cost calculator, and especially for including prices charged by parent corporation Spectrum Health. Financial incentives will encourage the use of the cost calculator and “train people to shop around,” even after a person reaches their annual deductible and 100 percent of the cost of a test or procedure is covered.
“It’s the right attitude. It’s the right thinking. It’s the right type of information. They’re not shying away from enabling competition at the level of where it exists or hiding the fact that some rates from some network providers might be significantly higher than rates for others, including, by the way, their mother ship,” he said. “Priority is definitely on the leading edge.”