GRAND RAPIDS — Priority Health members who have used the insurer’s cost estimator have saved more than $6.3 million in the two years the online tool has been available.
The amount represents the out-of-pocket savings for Priority Health enrollees who went online and used the cost estimator to gauge what they could expect to pay for elective care such as an upcoming medical procedure or diagnostic test.
According to executives at the Grand Rapids-based health insurer, the results show the potential for empowering consumers with cost transparency for their health care.
“It resonates well,” said Nathan Foco, senior director of market research and consumer analytics for Priority Health. “It’s something people are connecting with. It’s a tool that connects with people in a way that’s on a personal level, giving folks their specific estimate.”
Since Priority Health launched the cost estimator in 2015, one out of 10 members used the tool at least once. More than 40 percent of those who used it did so more than once. The resulting average $1,000 out-of-pocket savings comes from members who opted to receive treatment or have a procedure done at a lower-cost facility.
The rise of high-deductible health plans over the last decade that has consumers paying more out of pocket for their medical care served as a key driver in the use of the cost estimator. About 60 percent of Priority Health’s nearly 800,000 members are enrolled in a plan with an annual deductible of $1,000 or more, and that rate is growing by one percentage point annually.
A September 2016 report by the Washington, D.C.-based Health Care Cost Institute found that people enrolled in a high-deductible plans pay an average of $1,030 annually out of pocket for care, compared to $687 for a traditional health policy with low deductibles.
As consumers pay those higher deductibles, Priority Health developed the cost estimator so members can look up costs for hundreds of elective medical procedures or diagnostic tests. The tool provides members an estimate of the cost and how much they can expect to pay for their share, based on their own benefits.
Priority Health coupled the cost estimator with quality data and incentives that reward members with $50 to $200 in a pre-paid debit card for using the tool and choosing the low-cost care provider. Since the beginning of 2016, Priority Health has paid out about $500,000 in rewards to members, Foco said.
The wide variances in prices that occur for a procedure or diagnostic test, oftentimes within the same market, drove the formation of the cost estimator as well.
While the out-of-pocket savings met expectations, the usage offers a better measure for the cost estimator’s benefit, according to Priority Health executives. Enabling members to access cost estimates before deciding where to go for care makes them better consumers of health care and will pay bigger dividends in the long run, Foco said.
“The more we engage and connect with our members, employers and employees, ultimately that is one other way of influencing the overall cost curve,” Foco said. “This experience is really aimed at consumerism and engaging them in this journey.”
Priority Health’s transparency tool includes cost estimates for diagnostic tests and procedures at parent corporation Spectrum Health.
Many health insurers today offer some form of online tool to provide cost estimates or a range people can expect to pay out of pocket for a test or procedure. Despite their emergence, price transparency has a long way to go in health care, said Anthony Colarossi, a health care consulting partner at Plante Moran PLLC.
Price transparency now is largely restricted to estimates for diagnostic tests and more common procedures, Colarossi said. There remains a need for health systems to fully embrace transparency and publish their prices for care.
“What incentives are there for organizations, health systems, to really create this dynamic of competition based on price? They feel much more comfortable having that dynamic be on quality and service,” Colarossi said. “I see most old guard health systems as being in a protectionist mode, and they will carry this on until they are confronted with a market entry that truly challenges them on access to physicians and measurable quality outcomes in addition to price.”
In the years ahead, price transparency will move from today’s estimates and ranges for a test or procedure to “a much more narrow range (and) very specific amounts that help people make the decision even clearer” when they’re seeking care, Colarossi said.
The push for greater price transparency in health care could come from younger members who came of age with the internet, are accustomed to having information at their fingertips and “who grew up with the Amazon shopping experience,” Colarossi said.
At Priority Health, members using the cost estimator come from across the demographic spectrum and have an average age of 46, Foco said.
Priority Health offers the cost estimator for members enrolled in group and individual policies and is looking to expand it to Medicare enrollees, a demographic that Foco expects will use the tool as well.
“Obviously, we’re seeing the positive engagements and usage in the under 65 (members), and I’m sure it will hold up well with the over (65),” he said.
The use of Priority Health’s cost estimator exceeds the “very low” usage rates of similar initiatives at many health plans that typically hover in the low single digits, according to Allan Baumgarten, a Minneapolis, Minn.-based health care consultant.
He calls the use of Priority Health’s cost estimator “pretty remarkable,” but he doesn’t see cost transparency yet becoming the norm for health care, given the low rates of many initiatives across the nation and their limitations to elective care.
While there are opportunities to use cost estimators to drive consumerism in health care, “just keep your expectations at a realistic level,” Baumgarten said. Transparency initiatives, for example, generally do not get into cost estimates for episodic care, or care for the long-term treatment and management of chronic illnesses.
“In a lot of cases, there’s really not a lot of opportunity to be a good consumer and shop because of the particular circumstances,” Baumgarten said.
At Priority Health, the focus now is to reach out more to employers to encourage their employees to use the cost estimator when preparing for a test or elective medical procedure, Foco said. The health plan also intends to continue adding more tests and procedures to the cost estimator, and may add areas such as pharmacy prices in the future, he said.