Knowing the costs of medical procedures couldn’t be more important to Colin Cooper’s business, but getting access to that information hasn’t always been possible.
As CEO of Eastford aerospace components maker Whitcraft LLC, Cooper’s 500 Connecticut employees are in a self-insured health plan so the cost-conscious company is responsible for paying out medical claims.
But for many years, the company’s employees, who recently shifted to high-deductible health plans, have been operating in the dark when it comes to knowing what different hospitals and doctors charge for similar procedures because that information traditionally hasn’t been available. That’s about to change.
Whitcraft recently signed up for a new insurance program with Anthem Blue Cross and Blue Shield in Connecticut, called “SmartShopper, ‘’ that will not only allow Cooper’s employees to compare prices between hospitals and doctors, but also receive cash rebates for choosing lower-cost providers.
“We are trying to design our plan so employees have some skin in the game and look at the cost benefit of the services being provided,” Cooper said. “Like a lot of manufacturing companies, health care costs are a big deal for us. We don’t have the opportunity to pass those costs onto customers.”
Anthem’s SmartShopper program is part of a growing trend among health insurers offering price-transparency tools in a bid to reduce health care costs by making customers more aware of what they are paying for medical procedures.
It’s a trend even the state of Connecticut is trying to get in on.
Gov. Dannel P. Malloy proposed a bill last week to create an all-payer claims database for the state that would provide information relating to medical provider safety, quality, and cost-effectiveness, something already in place in Massachusetts, Maine and New Hampshire.
The stakes are potentially significant.
According to a study by Thomson Reuters, about $36 billion could be shaved off the costs of employer-based insurance plans if employees use pricing tools to select health services, part of the reason insurers are investing in them.
Bloomfield insurer Cigna Corp. unveiled a price-transparency program last week, which company officials say may be the most comprehensive offering in the market.
Cigna’s services allows customers to assess medical costs — including specialist, facility and related fees — according to the real-time status of their health plan deductibles and co-insurance, as well as their available health spending account funds.
It provides access to exact prices for more than 200 common medical procedures and allows Cigna customers to compare a physician’s costs for performing a procedure at different hospitals.
Marie Jinks, Cigna’s director of eBusiness, said the cost and quality of medical services can vary significantly between doctors and hospitals but patients traditionally haven’t paid attention because they weren’t responsible for much beyond a co-payment.
But as employers increasingly shift health care costs onto their employees, they have incentives to be more cost conscious, observers say.
The price-transparency tools can be especially beneficial for researching services, like MRI’s or X-Rays, where there is likely little quality variation, but significant price differences among providers.
Costs for a colonoscopy can vary by a few thousand dollars, depending on whether the service is delivered at a hospital or outpatient surgery center, Jinks said.
According to Anthem’s SmartShopper tool, for example, the cost of a colonoscopy at three undisclosed Hartford health care providers located 3.5 miles apart are $3,280, $2,821, and $1,718, respectively.
Healthcare providers have been supportive of more price transparency, but they are also cautious about the reliability of data and stress the need for disclosures about quality of care as well.
Matthew C. Katz, executive vice president of the Connecticut State Medical Society, said it is difficult to pinpoint exact medical costs charged by providers because doctors have different contracts and reimbursement rates with different health plans.
That means there could be dozens of different negotiated rates for the same procedure. Articulating that in an easy-to-understand way to consumers can be a challenge.
“There isn’t often consistency between going online to search for a price, getting a bill from the doctor and what insurers ultimately charge,” he said.
Health care decisions also shouldn’t solely be based on price, Katz said. Provider quality is just as important, especially since better quality care can lead to cost savings in the long run.
“If a patient is simply looking at this on a cost basis they aren’t being fully informed,” Katz said. “They should be making decisions based on costs and quality, which includes asking doctors about their background and training as well as how many times they’ve performed a procedure.”
Cigna’s Jinks said the insurer’s new pricing tool provides some quality information, including the level of board certification and industry designations of physicians. There is also an evaluation of how physicians perform compared to their peers, and patient outcome and cost efficiency measures for hospitals.
Another critical question is whether price-transparency tools actually change patients’ behaviors. Paul Bartosic, Anthem sales director, said SmartShopper, which was developed by Compass Healthcare Advisers of Bedford, N.H., has been effective, with six out of 10 customers who use it deciding to choose the more cost-effective provider.
Part of the success, Bartosic says, is being driven by the incentives that Anthem offers customers. People who choose more cost effective facilities or doctors share in the savings with a rebate of up to $250.
The SmartShopper tool is an online and customer-call service that doesn’t show exact prices, but rates providers on the cost of about three dozen different medical procedures. It is being piloted by three of Anthem’s Connecticut customers.
Cooper, Whitcraft’s CEO, said he hopes the tool will stem its rising health care costs, which climbed double digits last year.
“The goal is to make sure that our costs increase at much a lower rate than the rest of the market,” Cooper said. “Over the long run, that will give us a significant competitive advantage.”
Read more
Can a powerful database improve health outcomes and slow costs?
