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Need Healthcare? Let's Go Shopping or Not

We all shop. Every day we decide which products and services to buy. But shopping for medical care, typically, has been different.
Creating Financial Incentives to Shop
Employers have raised deductibles and coinsurance rates in their employee health benefit options substantially over the last decade.10-12 The introduction and subsequent growth of consumer-directed health plans (CDHPs) with health spending accounts (HSAs) has supported this change. Forty-five percent of employees in large firms now are in plans with deductibles of $1000 or more, as compared to 9% in 2008.13 (In an unfortunate turn of phrase, employees sometimes are described now as having more “skin in the game” regarding their healthcare decisions.)
As a result, employees have a stronger incentive to be “price conscious,” or at least more aware of out-of-pocket differences across providers. Moreover, because a large number of employer-sponsored health benefits options still feature relatively low deductibles, supporters of the retail competition strategy see unrealized potential for higher deductibles to reduce cost growth. Researchers at the RAND Corporation have estimated that if 50% of Americans were enrolled in high-deductible plans with HSAs, annual health spending would be reduced by $57 billion.14 In fact, enrollment in these plans continues to grow.15
However, there is research that questions the notion that aggressive price shopping occurs under CDHPs.16 Unsurprisingly, there have been concerns that high deductibles will discourage use of needed services and impose financial hardship on those consumers who do seek care.10,17,18
Some large employers (eg, CalPERS and Safeway) have dramatically increased the reward for price shopping by instituting “reference pricing” for specific services.19-21 Under reference pricing, the employer sets a fixed level of reimbursement for a service. If the consumer chooses a provider with a price that exceeds this level, the consumer pays the difference, and the “excess cost” does not count against that person’s deductible or coinsurance payments above the deductible. Research suggests that consumers faced with reference pricing are more likely to choose providers with prices under the set reimbursement level, with many providers reducing their prices to attract consumers.
Although promising, reference pricing does not seem applicable to all types of medical care and all situations.9,19 Consequently, some researchers see it as “not a panacea, but a useful and important tool.”9 Others view it as a piece of the healthcare puzzle with the potential to generate “modest” savings.22
Supporting Informed Shopping Behaviors
For the retail strategy to work as intended, healthcare consumers must have ready access to useful information that supports their decision making. Here again, there has been change in the direction envisioned by proponents of the retail strategy. A national movement supporting the development, vetting and dissemination of clinical quality measures has emerged.23 However, it has proven difficult to reach consumers with these measures by simply posting them online, the most common method of dissemination.24,25 Even among the 20% of people who say they are aware of the measures, less than half find them useful when shopping for providers.26 If they go beyond seeking advice from family members, friends, and their physicians, most consumers find greater value in measures of consumer experience or consumer ratings of physicians and user comments shared through the internet.27
Providing consumers with useful cost information has proven even more difficult. Most public reporting sites offer, at best, average costs at the group or practice level. Frequently, costs or prices are reported as averages for a geographic area. As one critic notes, “you can’t act on those numbers” to choose a specific provider.28 Moreover, the actual cost to consumers depends on their benefit coverage along with the rates that their insurance companies negotiate with providers.29,30 Some insurers have developed cost calculators to aid consumers in estimating out-of-pocket costs when receiving services from different providers.31 While promising,32,33 these efforts are in their early stages. In addition, the growth of narrow network benefit options has complicated matters, as plans must keep calculators up to date on “in-network” provider status—a task that some find daunting.
Even for consumers armed with information on quality and costs, discerning provider options—an essential component of shopping—can be challenging.34 Consumers may find that the physicians they choose are not accepting new patients,34 or cost-conscious consumers who choose in-network providers may find that they still incur out-of-network charges.34-36 For example, a patient may choose an in-network hospital for surgery only to find later that the anesthesiologists in the hospital are part of a group that is not in the health plan’s network. Problems such as these are likely to discourage shopping behavior on the part of consumers. But, they can be overcome if health plans and employers are willing to devote sufficient attention and resources to addressing them.

Copyright AJMC 2006-2018 Clinical Care Targeted Communications Group, LLC. All Rights Reserved.
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