The Challenges of Healthcare-Cost Transparency
Despite all of the information now available on healthcare costs, new research finds only a small number of workers actually use it or even know it exists. How can HR help increase awareness and usage of this data?
By Maura C. Ciccarelli
When it comes to providing employees with costs for healthcare providers and services, it seems that the spirit is willing but the resources are still weak-and few people are using available information to make decisions about their medical care.
An April Kaiser Health Tracking Poll showed that only 36 percent of people with employer-sponsored insurance reported seeing information related to the quality of doctors, hospitals and health insurance plans in the last 12 months. Plus, fewer people used price information to select their doctors (4 percent), hospitals (2 percent), and health plans (13 percent), says Bianca DiJulio, an associate director with the Kaiser Family Foundation and one of the authors of the report.
The report, which also focused on people's attitudes about the Affordable Care Act, included phone surveys of more than 1,500 people. Of that number, about 600 had employer-based insurance.
"We are starting to explore some other issues that aren't as directly tied to the ACA and are thinking more about the consumer experience," says DiJulio. "Certainly over the last many years there has been a lot of talk about consumer directed healthcare."
So why such low participation for employees with insurance?
"It may not occur to people that they can search," says DiJulio, since most people choose their provider the old fashioned way-by going through their health plan's list of providers and making a choice based on location and, perhaps, referrals from co-workers, family and friends.
Industry watchers also say if people want to search, it is not easy.
"There's not a lot of price data out there for employers to use," says Rick Wald, director and national practice leader for Deloitte's Employer Healthcare Consulting division, based in the greater Minneapolis-St. Paul area. "Employers would love to have better transparency data [but they want to] marry price transparency with quality data. They want to recommend that people go to the lowest-cost option for a comparable quality outcome. It's not just price; it's about price and quality."
Couple that with the newer plans that share costs with employees, such as Consumer-Driven Health Plans and high-deductible plans, and employers are saying they can't leave employees in the cold when it comes to selecting providers and services.
"CDHPs can be the first time that people are exposed to having any reason to care about cost of services," says Sander Domaszewicz, principal and senior consultant with Mercer Health & Benefits Services in Newport Beach, Calif.
Mercer's 2014 National Survey of Employer-Sponsored Health Plans shows that 77 percent of large employers (those with 500 or more employees) offer transparency tools, either by phone, on the web or through a mobile app. While most of these resources are provided by the health plan, 12 percent of large employers contract with a specialty vendor. Some of the independent players in this space include Castlight, Change Healthcare, Healthcare Bluebook, Compass Professional Health Services, Truven, WebMD, Healthsparq, SpendWell, Symbiosis Health, Health Advocate, Patient Care and Consumer's Medical Resource, among others.
"Some of the early efforts at what we're calling price transparency aren't in my eyes true price transparency yet," says Wald of Deloitte. "We might use five stars to indicate that this hospital generally more costly or less costly than some other hospital."
A star system doesn't take into account the complex process of calculating the likely cost of a procedure, which includes factors such as whether health and family histories dictate a simple or complicated procedure and the additional costs for multiple providers (doctors, anesthesiologists, labs, etc.).
Where companies are providing tools, the biggest hurdle is how to invest employees in the price-checking process, says Domaszewicz. Some of his clients are giving employees a lower share of the cost if they use the higher-ranked providers within their health plan's array of services.
Then, there is the behavioral side of the issue.
"We have become a very in-time-of-need type of society and sometimes it can take a little bit of effort and energy to figure out how the tools work, where they're located and how to use them," says Domaszewicz. "Oftentimes when you are going through a health incident, it's not the easiest time to learn something new."
One way to familiarize employees with the tools is to have them do a research trial run before they have a critical need, such as before getting pregnant.
"On the flipside, I'm not sure we're ever going to be at a place where people are 100 percent comfortable thinking that [these tools will provide] all information [the patient] will ever need to make a perfect decision and it was incredibly easy," says Domaszewicz.
Is there anything else HR folks can do to tackle the problem? Wald says employers should continue putting pressure on their health plans to provide more transparent pricing information. "It's not where we'd all like it to be but it's better than where it was a few years ago and it will continue to evolve," he says.
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