A few years back, employers seldom asked about what they could do to make their employees better shoppers for health care.
Today, Stacy O’Keefe, an account executive at insurance agency Lighthouse Group, says she gets that question far more often, perhaps as much as 80 percent of the time “if not more.” The shift comes in the age of high-deductible health plans as employers give more attention to enabling employees to gain some idea of what they can expect to pay for care, she said.
“It’s been coming up more frequently over the last few years (and) it’s really becoming a big push now,” O’Keefe told MiBiz. “It takes a while for employees to catch on and we’re seeing more and more people utilizing the tools now.”
That change in just a few years reflects how employers are continually searching for ways to control costs by better engaging employees in their health care.
Employers embedding some form of price transparency tool into their benefits want to help employees understand the actual costs of care, encourage them to shop around and compare prices for diagnostic tests or medical procedures, O’Keefe said.
The push has come as many employers transition to lower-cost, high-deductible health coverage, a shift that’s led to employees paying more out of pocket for care.
“There’s no other service that we blindly purchase without knowing what the price is. We don’t shop for groceries without having any price tag associated with it, but here we are with all of these high-deductible health plans now and having to shop for a service that never had any transparency,” O’Keefe said. “We’re really pushing people to continue to be better consumers of health care and giving them the tools to be able to shop for lower-cost procedures.”
One indicator of the movement comes in the 2019 best practices survey by Willis Towers Watson PLC that shows 26 percent of respondents have a tool in their health benefits for employees to look up price and quality data on care providers. That’s expected to grow to 31 percent for 2020 and to 48 percent by 2021 and beyond, according to the survey results.
However, employees’ usage of cost and quality tools has been relatively low, trending nationally in the single digits.
“It still has a long way to go,” said O’Keefe, citing the need for platforms that are more user-friendly.
Grand Rapids-based Priority Health’s cost estimator, which tailors estimates to an individual’s benefits package, has fared better than the national average.
Some 14 percent of Priority Health’s more than 800,000 members have used the cost estimator, which launched in 2015. As of mid 2018, Priority Health reported the cost estimator’s use at 10 percent.
Priority Health makes the cost estimator available for all health plans. Members who use the estimator to compare prices charged by care providers can get a gift card of $50 to $200. They get the higher amount if they opt to use a lower-cost provider. Last year, the health plan also added prescription drugs to the cost estimator.
The cost estimator’s use has grown alongside greater awareness of it among employers and employees, said Megan Schmidt, vice president of sales and client services at Priority Health. As the cost of health coverage keeps rising, employers also are looking for alternatives other than shifting more of the financial burden to their employees.
That’s led them to encourage the use of tools that enable employees to shop around for care, Schmidt said.
“That cost equation is something everybody is dealing with in health care and they’re looking for solutions,” she said. “We’ve reached this tipping point that they want their employees to be engaged not just in their health but in the health care cost equation, and that is about helping them be consumers in utilizing health care.”
Price transparency has become a top-of-mind issue for employers as costs keep increasing and high-deductible plans become the norm, Schmidt said. She sees the demand for health care cost transparency only growing in the digital era when so much information is readily available.
“With the boom of apps, you can shop for anything today and make a cost comparison. As a consumer, it’s not just a ‘nice to have.’ It’s something that we expect and we demand, and health care is no different,” Schmidt said.
Connecting the dots
Priority Health reports that members who use its cost estimator save an average of $680 per medical procedure. On average, one in five members will opt to have a medical procedure or diagnostic test done at a facility that charges what’s deemed a “fair market” price.
As well, employers are becoming more aware of how costs for medical procedures or tests such as an MRI can vary significantly among care providers within a given market, said Shannon Enders, managing partner at Lakeshore Employee Benefits in Norton Shores.
Enders cites a study his company did this year among hospitals and outpatient centers across a market that spans Grand Rapids to Muskegon, and Ludington to Grand Haven. The cost for a colonoscopy ranged from $650 to $2,900.
“Wouldn’t you want to know that if you’re an employee?” Enders said.
As awareness grows about those kinds of cost variations, even small employers that in the past were not as interested in the subject “are starting to connect the dots that more people shopping for services will drive down prices,” he said.
Enders attributes the growing interest in price transparency to the greater use of high-deductible health plans, which is driving more employers to identify ways to ease the burden on their employees.
“There’s way more interest in things like mobile apps and price transparency,” he said. “We don’t have enough transparency yet. We’ll get there. Quicker would be better.”
‘Back to ugly increases’
Greater employer interest in programs that enable employees to shop for care and compare prices has been one of the trends noted by agents and cost surveys as open enrollment for 2020 starts this week.
In terms of premiums, national cost surveys peg 2020 average increases in the mid-single digits for large employers.
O’Keefe at Lighthouse Group reports renewals generally coming with 6-percent increases for self-funded employers in the market, and 4-percent to 9-percent increases for small employers.
Enders said he’s delivered many policy renewals this fall to clients that range from 7-percent to 18-percent higher for small employers, after a few years of moderate increases.
“In the small group, we’re back to ugly increases for this fall and the first quarter,” he said. “That’s discouraging. It’s disheartening.”
Employers in a tight labor market may have limited options to counter the higher insurance premiums by shifting costs to employees, Enders said. He tells of a CPA firm that got the 18-percent increase for its 2020 policy renewal and decided to accept it, rather than look at options that could cause disruption for employees and lead people to seek employment elsewhere.
“He said, ‘We’re making money and I can’t afford to lose any people. We’ll just take this,’” Enders said.
In West Michigan this year, a family health plan on average cost $17,472, according to the 2019 survey of employer health costs by The Employers’ Association in Grand Rapids. A two-person plan in West Michigan costs an average of $13,752 for the year, and a one-person plan averaged $5,988.
Along with higher interest in price transparency to control rising costs, more employers are demanding data on how well their health benefits work, said Jerry Konal of Willis Towers Watson.
The ability to use data and metrics to evaluate a plan’s performance and how well it achieves objectives rated highly in the firm’s 2019 survey, Konal said. He specifically cites goals such as reducing cardiovascular disease or lowering ER visits by employees, as well as programs employers have implemented to improve the overall well-being of employees, as areas in which companies are demanding more data.
Nearly eight of 10 large employers responding to the 2019 Willis Towers Watson survey responded that they intend to make measuring plan performance a priority within three years, more than double the rate of the last few years.
“Measurement is pretty top of mind. They want to be able to say, ‘Did I achieve that objective?’” said Konal, a senior consultant in health and benefits at Willis Towers Watson’s Southfield office. “What we’re seeing is more and more organizations, even small and mid-sized, they get that they’re spending a lot of money on these programs and they don’t know if they’re getting a lot of value out of it.”