Paying patients to use <scp>lower‐priced</scp> providers

Whaley, Christopher; Sood, Neeraj; Chernew, Michael E.; Metcalfe, Leanne; Mehrotra, Ateev

doi:10.1111/1475-6773.13711

Cited by 6 publications

(3 citation statements)

References 33 publications

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“…48 These benefit designs give consumers an incentive to choose lower cost providers, but they vary in the information given to consumers. Price information alone can be useful for a single service such as an MRI or total knee replacement, [49][50][51][52][53] but price information needs to be accompanied by an incentive to use the information, 54,55 and the most important question with respect to affordability may not be the price of the MRI, but whether the consumer is likely to benefit from an additional MRIa question concerning the quantities of prescribed services.…”

Section: Discussionmentioning

confidence: 99%

Analysis of Affordable Health Care

et al. 2022

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Background: Lack of affordable health care affects the uninsured, commercially insured, and Medicare beneficiaries. Yet, the wide variation in providers’ prices and practice styles suggests that more affordable care already may be available and data on low value and wasteful care suggest that lower cost care need not come at the expense of better quality. Although price variation has received the most attention in the literature and legislation, total cost of care is a function of both unit prices (fees) and the quantity of services. Objective: To partition provider-specific variation in total annual risk-adjusted per capita expenditures on health care services into variation in unit prices (fees) versus quantities of services, and to explore the relationship between low value, avoidable, discretionary, and recommended care to total health expenditures. The analysis is important because both prices and quantities of services can affect affordability and reductions in prices versus quantities have very different effects on providers’ profits. Setting: 2018 data from the Minnesota State Employees Group Insurance Program (SEGIP) that offers a tiered cost-sharing health insurance benefit design to 130,000 State employees and their dependents (SEGIP “members”). Exposure: Each year during open enrollment, SEGIP members choose a primary care clinic (PCC). The PCC can make decisions regarding both unit prices and prescribed services. PCCs are placed in one of four cost-sharing tiers based on the total annual risk-adjusted per capita health expenditures for the SEGIP members who choose their clinic. Members choosing higher cost PCCs face higher deductibles, copayments, and maximum out-of-pocket spending limits. Measures: Overall prices and use of inpatient, outpatient hospital, professional, and pharmaceutical services, total and avoidable use of emergency department visits and inpatient admissions, low value care, testing for patients with pneumonia, and recommended preventive care. Results: Differences in total risk-adjusted annual per capita health expenditures across the care systems were substantial. Higher cost providers had both higher unit prices and higher use of services. Variation in the quantity of health care services explained more of the variance in total spending than variation in prices. Prices for professional services and use of inpatient, outpatient hospital, and pharmaceutical services, and ambulatory care sensitive admissions, contributed significantly to high total expenditures. Lower cost PCCs in the lowest cost-sharing tier had higher rates of low value care and lower emergency department visits per capita. Neither the number of investigations for patients with pneumonia nor the receipt of recommended mammography screening varied systematically by tier. Conclusions: Efforts to identify and expand sources of affordable care, including improved information and incentives for consumers, need to account for variation in both prices and quantities of services. Efforts to encourage more eff...

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Section: Discussionmentioning

confidence: 99%

Analysis of Affordable Health Care

et al. 2022

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“…Whaley et al found in a separate study analyzing data from 2017 to 2018 that prices decreased for beneficiaries in employer-sponsored plans that received a financial payment to choose care from lower-cost providers and that the effects were most concentrated among imaging studies, specifically magnetic resonance imaging (MRI) studies. 31 This again suggests that consumers can respond to price transparency initiatives when they are incentivized. However, consumers may not be the only market actors to respond to prices becoming publicly available.…”

Section: Background: Historical Perspectives In Academic Literaturementioning

confidence: 99%

Price Transparency in United States’ Health Care: A Narrative Policy Review of the Current State and Way Forward

Bernstein,

Crowe

2024

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Health care price transparency is gaining momentum as a tangible policy intervention that can unleash market principles to increase competition, help begin to decrease U.S. health care expenditures, and provide Americans with access to affordable, high-quality health care. Indeed, pricing reform is required to facilitate patient shopping in health care. In this narrative policy review, we offer a brief history of health care price transparency efforts and an overview of the health care price transparency literature. Further, we highlight the current rules and legislative initiatives aimed at achieving the full potential of health care price transparency. Lastly, we offer key takeaways and highlight suggestions for future policy directions, including the need to ensure hospital and insurance compliance through more appropriate penalties and incentives, importance of reducing regulation to promote financial upside that can be obtained by both patients and providers who actively promote shopping for lower cost, higher quality health care goods and services, and the need for transparent and easily found quality metrics, including outcomes most important to patients, driven by physicians “on the ground” with patient input.

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“… 15 Another recent study by Whaley et al using employer data from 2017 to 2018 saw significant reduction prices for imaging but no effect on utilization if consumers were given incentives to shop for care. 16 Results from 2010 to 2016 study by Gourevitch et al found the proportion of pregnant individuals who sought price information before childbirth more than doubled within the first 6 years of availability of a price transparency tool. These findings suggest that price information may help individuals anticipate their out-of-pocket childbirth costs.…”

Section: Policy Backgroundmentioning

confidence: 99%

Estimating the Impact of New Health Price Transparency Policies

Parente

2023

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This analysis investigates and scores the impact of new health price transparency rules. Using a set of novel data sources, we estimate substantial savings are possible following the implementation of the insurer price transparency rule. Specifically, we estimate annual savings to consumers, employers, and insurers by 2025, assuming a robust set of tools to allow consumers to purchase medical services. We matched claims with 70 HHS defined shoppable services by CPT and DRG codes and replaced them with an estimated median commercial allowed payment multiplied by a reduced cost of 40% based on estimates found from literature for the difference in cost between negotiated and cash payment for medical services. We consider 40% to be an upper bound estimate of the potential savings based on existing literature. Several databases are used to estimate the potential benefits of insurer price transparency. Two different all-payer claim databases were used, representing the entire insured population in the US. For this analysis, only the private insurer commercial population was examined, comprised of over 200 million covered lives as of 2021. The estimated impact of price transparency will vary significantly by region and income level. The national upper bound estimate is $80.7 billion. The national lower bound estimate is $17.6 billion. For the upper bound, the region with the most significant impact in the US will be the Midwest, with $20 billion in potential savings and an 8% reduction in medical expenditure. The region with the lowest impact will be the South, with only a 5.8% reduction. Concerning income, those at lower levels of income will have the most significant impact with a −7.4% (<100% Federal Poverty Level) to −7.5% (100%-137% Federal Poverty Level) impact. Overall, the total impact could be a 6.9% reduction for the whole privately insured population in the United States. In summary, a unique set of national data resources were used to estimate the cost savings impact medical price transparency. This analysis suggests price transparency for shoppable services may yields significant savings between $17.6 to $80.7 billion by 2025. Consumers may have strong incentives to shop with the rise in the use of high deductibles, health plans, and health savings accounts. How these potential saving are to be shared by consumers, employers and health plans has yet to be determined.

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Paying patients to use lower‐priced providers

Cited by 6 publications

References 33 publications

Analysis of Affordable Health Care

Analysis of Affordable Health Care

Price Transparency in United States’ Health Care: A Narrative Policy Review of the Current State and Way Forward

Estimating the Impact of New Health Price Transparency Policies

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