Driving Consumer Behavior Through Rewards Programs and Transparency

Health care transparency is a hot topic these days.

New regulations requiring hospitals to post their market pricing for procedures took effect on January 1. And upcoming regulations will affect employers, plan sponsors and insurers over the next three years.

But just what do we mean by health care transparency? And why does it really matter?

Health care transparency means insight into the varying costs of health care services and supplies within a given area. In theory, consumers should be able to see the tremendous variation in prices for the exact same care among hospitals and providers and get an estimate of what they will be charged for care—before they seek it.

Costs can vary tremendously within the same plan network and even within the same zip code. Why the difference? There’s no one “set” price for any given procedure, and providers can charge whatever they want to. Further, any time a provider agrees to become part of an insurance company’s network, it negotiates a contract with that insurer. So the provider might end up charging patients of one insurer $X—but patients of another insurer $Y—for the same procedure.

These days, stories about the cost of health care—and the fact that prices range so widely—are all over the news. And consumers are beginning to understand that they can—and should—shop for health care services, even AFTER they’ve met their deductible.

For a plan with 80/20 coinsurance, for example, it’s certainly preferable to pay 20% of a $500 bill versus a $1,000 bill. And the same goes for the employer—80% of $500 is certainly better than 80% of $1,000.

Take, for example, a prescription drug with the retail price of $766 for a 90-day supply. One insurer has negotiated a cost with the pharmacy of $485. For a patient who hasn’t met the deductible, that’s what s/he’ll pay out of pocket.

How Can You Help?

Educate Your Clients

Make sure they’re aware of the regulations that will be taking effect over the next three years and that they have plans in place with their carriers and consultants to comply.

Educate Your Clients’ Employees

Work with your client to create a communication plan to explain the concept of shopping for care, it’s importance, and how to begin. Emphasize what’s in it for employees (more money in their wallets!) and what resources are available to them.

Bring in Support

Shopping for health care—much like shopping for the best price for a car or a TV—can take time, and it helps to know exactly what you’re shopping for. An advocacy and transparency service can provide personalized, hands-on support as well as estimates specific to the individual—rather than just a high-level estimate. Last year, employers using DirectPath’s services saw an average savings of $2,720, with employees savings an average of $350.

Once the employee has price information, what next? Experts agree that employees need more than just access to online tools. They need personal guidance for health care shopping, one-on-one coaching and personalized notifications.

Encourage Use

Even the best transparency program won’t help unless employees actually use it. Consider adding a rewards program that gives employees a percentage of the cost saving if they choose a lower cost provider.