The Next Stage of Healthcare Consumerism

Some employers are turning to price transparency and quality reports in order to encourage employees to become active players in the fight to lower healthcare costs.

Thursday, February 14, 2013
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With more of their own money on the line, employees are more motivated than in the past to find out which medical providers offer the lowest prices for the best care. That's according to the Robert Wood Johnson Foundation and other healthcare-research organizations.

By the same token, employers also have much at stake in ensuring their employees have access to information and tools to help them identify high-quality, low-cost care. Poor quality care costs a typical employer between $1,900 and $2,250 per employee per year, according to the RWJF.

"We'd like to see a stronger presence from employers on price transparency," says Anne Weiss, team director at the RWJF in Princeton. "They're spending a lot of money on healthcare and, frankly, not much for it."

Soon, it is hoped, employees will automatically research providers on the basis of price and quality before going for a check-up or scheduling a MRI, just as they evaluate restaurants on and hotels and resorts on But for this to become a widespread trend, says Weiss, more employers need to pressure insurers and healthcare providers to make this information readily available.

"I think it's unforgivable that I'm paying for healthcare and yet I can't find out what's being paid for the service," she says.

On the national level, large employers such as 3M, Boeing Co. and Capital One have formed an organization called the Catalyst for Payment Reform, which is pushing insurers and healthcare providers to make price information readily available to their employees, says Weiss.

Meanwhile, the RWJF is partnering with employers in 16 regions throughout the United States on its Aligning Forces for Quality, or AF4Q, initiative to help obtain better information on the cost and quality of local healthcare providers. In Washington State, for example, the AF4Q's Puget Sound Health Alliance created "Community Checkup" reports on the quality of care provided by area hospitals, medical groups and clinics. King County, the state's largest municipal government, saved $23 million in one year after it used the reports to assess its provider network and decided to change insurers. 

HR needs to be deeply involved in pushing for price transparency from medical providers, even though providers are often reluctant to share such information, she says.

The rise of high-deductible health plans means employees tend to have much more of their own money at stake than in the past, she says, so they're motivated to use that money wisely. 

"Employees need to see the full picture of what they're paying for," says Weiss. "Employees may want to know the total cost, but they especially want to know what it's going to cost them out of pocket, and that takes more intensive interaction between plan and provider."

Vendors such as Brentwood, Tenn.-based Change Healthcare, Manchester, N.H.-based Compass Healthcare Advisers and San Francisco-based Castlight Health offer tools and services designed to help their clients' employees become more price-conscious healthcare shoppers.  These tools show employees what their total out-of-pocket costs will be for a given service or procedure based on the coverage, deductibles and co-pays of the particular plan they and their dependents are enrolled in.

However, price transparency by itself may not be effective, says Dr. Dena Bravata, Castlight Health's chief medical officer. She cites a report published last March in the journal Health Affairs, which found that consumers are likely to perceive high-cost providers as higher-quality providers, and vice versa.

"If consumers are just presented with a list of providers and their prices, they'll often avoid the low-cost provider on the assumption that they're also the lowest-quality provider," she says. "But if you present the cost information along with clear, easy-to-read quality information, then they're much more likely to choose the lowest-cost provider."

Castlight Health includes quality measurements such as patient satisfaction data and clinical quality measures such as hospital readmission rates. It's also started collecting patient satisfaction data on individual providers, says Bravata. It's also working with groups such as the Minnesota Community Measurement (part of the AF4Q initiative) to obtain more quality data on providers, she says.

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Quality reports on healthcare providers are hardly new, and Weiss acknowledges that they haven't been widely read by consumers in the past. But things are changing, she says.

"When the first reports came out, we called them 'door stoppers,'" she says. "They were these 400-page PDFs that no one wanted to go through. But they've gotten so much better now -- they're much more interactive. Plus, health benefits are changing."

In some cases, employers (particularly self-insured organizations with 1,000 or more employees) are using incentives to encourage their employees to choose providers based on cost, says David Marini, managing director of Roseland, N.J.-based ADP's Strategic Advisory Services group.

"If their employees choose the lowest-cost medical providers, these companies will share some of the savings with the employees," he says.

Other employers are using incentives to encourage their workers to make checking the quality scores of local healthcare providers a habit before making an appointment. At the University of Minnesota, employees can receive a $50 stipend if they complete a tutorial on how to use the "Minnesota HealthScores" reports.

A major health insurer Marini is working with will soon be releasing an "app" for smartphones and tablets that will show employees enrolled in its health plans the locations of medical providers and the prices they charge for various procedures, he says.

Regardless of how user-friendly the tools become, however, employees won't use these tools unless they're made aware of them -- and that's where HR comes in, says Marini.

"There have to be major communication campaigns -- just putting these tools in place will not get organizations to where they need to be," he says. "Someone has to take the responsibility for education, and that responsibility falls on the employer."


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