March 04, 2019 04:00 PM - Modern Healthcare
Shelby Livingston
Employers are experimenting with ways to get a handle on the rising cost of providing healthcare benefits to their workers. One study has found that mailing a check to workers who visit lower-price providers for certain elective healthcare services is an effective, though modest, way to reduce costs.
Paying workers between $25 and $500 for using a price transparency tool and then opting for a lower-cost provider for certain designated services resulted in a 2.1% reduction in the average prices employers paid for those services over one year, according to a RAND Corp. study of one such rewards program.
Rewards programs that pay workers to shop around "will result in some net savings to you as an employer, but it's not going to save a ton of money," said Dr. Ateev Mehrotra, a RAND adjunct policy analyst and one of the study's authors. "This is the first evidence that we're aware of that these programs are effective."
The researchers, who published their findings in Health Affairs on Monday, studied insurer Health Care Service Corp.'s rewards program offered by 29 employers to about 270,000 workers enrolled in PPO plans in 2017—the program's first year. The rewards program was layered on top of the employer's existing benefit plan.
If workers received one of 135 eligible elective medical services, ranging from an MRI to a knee replacement, they could receive a check for $25 to $500, depending on the service and cost of the provider. To be eligible, patients also had to use a price transparency tool or call a rewards advice line before receiving care.
Researchers found that 8.2% of patients used a price transparency tool, and of those, about 23% on average received a reward payment for going to a lower-priced provider. Across all patients enrolled in PPO plans offering the rewards program, 1.9% received a reward for going to a lower-priced provider.
But even with limited uptake, implementing the rewards program led to a 2.1% reduction in the average price per services across all eligible services, as patients switched from higher-cost to lower-cost providers. That translated to savings across all employers of $2.3 million, or $8 per member.
Researchers observed the biggest decreases in average prices for MRIs (4.7% reduction), ultrasounds (2.5%), and mammograms (1.7%), but didn't find significant changes in prices for CT scans or surgical procedures. But those employees who did shop around saved 78% on ultrasounds, 33% on mammograms, and 25% on MRIs, according to the study.
"We found that people really responded to the program mainly for imaging services, and that's where we find the bulk of the savings," said Christopher Whaley, an associate policy professor at RAND who also authored the study.
He noted, however, that researchers looked only at the first year of the rewards program. In the second year, enrollment nearly doubled and savings may have surged as a result.
Beyond rewards programs, RAND researchers have also studied reference-based pricing as a tool to reduce healthcare spending and cut down on the wide variation in prices among providers. Employers who implement reference-based pricing set a maximum reimbursement for shoppable services, and patients who seek care from a provider that exceeds that amount are on the hook for the rest.
Reference pricing, Whaley explained, has led to higher engagement among employees and more cost savings for employers than the rewards program, but many employers are reluctant to implement the strategy out of concerns that some workers will be saddled with major medical bills.