TRENDSparency

Over the past several years, there has been an increase in the number of companies focused on providing consumers with tools to compare provider cost and quality and to make decisions about medical services and prescriptions. Payers, providers, HCIT companies and even state and federal government have tried to develop solutions, each with the goal of creating smarter, more informed health care consumers. Nearly all of these tools share one common attribute – they provide access to cost information that the individual consumer must take the initiative to find.

While an improvement over a complete absence of information, most of these offerings fail to have the desired impact, not because they provide inaccurate or insufficient data, but rather because they fail to engage enough users to make a difference. In fact, typical utilization rates for these tools average less than 10%, which brings me to the heart of the problem:

Just because information is available doesn’t mean people will use it.

Not only do consumers want healthcare savings and quality information, but they want it delivered in an easy-to-access, easy-to-use manner that simplifies – not increases the complexity of – their lives. Like any online shopping tool or app, the most effective are those that are personalized to the consumer and deliver information to them at the right time, in the right place and with clear next steps about how to take advantage of the information being provided.

As we think about this in the context of healthcare consumerism and delivery of cost transparency, we must follow lessons from other successful, consumer-focused organizations. Why can’t those of us in healthcare deliver the same richness of information and high-level of personalization that an Amazon or Nordstrom offers? The answer is: we can and we should.

Healthcare costs in this country are a tremendous and growing burden on our future, and I do believe that greater cost transparency is one of many levers we can pull to address the issue. However, it will be those players in the healthcare ecosystem that can proactively deliver personalized and actionable information to effectively engage healthcare consumers that will have the greatest impact on healthcare costs in this country.

With the era of health insurance exchanges approaching quickly, few Americans understand how profoundly this could affect the way they choose their benefits. While many of the federal regulations governing exchange portals have yet to be finalized, exchanges offer a clear example of the movement toward consumerism, where individuals will take a more active role in how they purchase their healthcare.

Along with this change comes the opportunity for individuals to compare coverage options, personalizing benefits to best fit their needs. However, for this to work, we must equip those individuals with the right set of tools and information, enabling them to maximize their benefit dollar and minimize their out-of-pocket costs. It is this concept of consumerism in healthcare that has given rise to the cost transparency space and why these transparency tools will play an integral role in the success or failure of the exchange marketplace.

Despite the uncertainty surrounding health reform, we’ve already seen this shift with companies such as Bloom Health forming private health exchanges to assist employers in controlling their healthcare spending. Essentially, employers provide their employees with a set amount to spend on medical, dental and/or prescription coverage and then make a user-friendly “marketplace” of plans available from which employees can then choose. Empowering individuals with this choice and enabling them to make discerning decisions about how they allocate their benefit dollars are the right steps toward increasing individual accountability and driving down cost.

These efforts shouldn’t stop with plan-selection tools; otherwise, we are left with an environment where individuals have the ability to shop for coverage but not for care.  How can we expect to save money on our health insurance if we don’t know the costs of the services and medications covered by our plan? It’s like unlocking the door to a building, but leaving all doors to the rooms locked; we can only get so far.

As the healthcare landscape evolves, I firmly believe that giving individuals access to the right information in a consumer-friendly manner is the central element to moderating rising healthcare costs in America.

Let’s face it – no one really likes going to the dentist. But it may be surprising to hear that many Americans dread not only the sound of the drill, but the bill they receive after these visits. With rising premiums and more restricted benefits, dental coverage is often the first in line on the chopping block for many companies. As a result, slightly more than half of Americans today have dental coverage. And when they do, dental plan designs typically come with higher out-of-pocket costs for patients and their families.

As a result, even with $108 billion spent on dental services each year, an alarming number of people are neglecting proper, preventative dental care. An estimated 75 percent of adults suffer from gum disease, and while tooth decay is the most common and preventable disease in children, a U.S. Department of Health and Human Services study cites that only 48 percent of children entering kindergarten had seen a dentist in the previous year.

Employees and their families need to know they have options when it comes to the cost of dental services.  Understanding the cost components before each visit and gaining a window into where to find services at a lower price can alleviate much of the financial pain associated with these visits. Prices even for routine care can vary dramatically in the same market and network.

• Standard preventive exams for adults could cost as much as $240 and as little as $55;
• One of the most common corrective procedures, cavity repair, can range in cost from $120 to $360 per cavity;
• Braces application, and other orthodontia services, can range from $2,400 to as much as $7,000.

It’s also worth noting that these variations in cost are not necessarily associated with quality. The size and location of a practice can contribute to different cost structures – so just because a teeth cleaning is $100 cheaper a few blocks away doesn’t mean your service or dentist is of a lesser quality.

Take a look at our most recent round of data in the Healthcare Transparency Index and let me know what you think While we may not be able to do much about that drill, we certainly can relieve some of the financial pain.

Most of us are aware that medication costs are a major concern for consumers – particularly those struggling with chronic conditions. Studies have cited increases in the number of Americans under the age of 65 who can’t afford prescriptions due to drug prices (which are rising faster than salaries), expanding chronic conditions, and changes in health plan coverage.

It’s also been validated that lower-cost drug regimens facilitate better medication adherence, leading to healthier patients and reduced total healthcare costs. A 2010 study from the New England Journal of Medicine determined that out-of-pocket costs clearly affect compliance of the more than 3.8 billion prescriptions written every year. As the Center for Health Transformation has pointed out, 40 percent of patients don’t adhere to treatment regiments, while 20 percent of new prescriptions go unfilled. The issue of medication compliance also crosses all socio-economic and all chronic disease states, and results in three times as many doctor visits – adding more cost to the patient and the healthcare system at large.

Drug companies and payors have tried a number of approaches to improve compliance including direct mail, text messages, email campaigns, ongoing follow-ups from nurses or care managers, “medication reminder” alarm clocks and watches. Cost-related programs like co-pay cards go further in terms of resonating with patients’ wallets, but also come with limitations, as they are often designed for people with lower incomes or are only good for a certain period of time or per household. So while these programs have moved the patient adherence needle to some degree, individually they have only made a small dent in a very large issue. Simple economics is one of the key factors in medication adherence is access to drug pricing information.

Drug cost savings are irrelevant if they’re not easily found and applied by the patient. Giving every patient the visibility they need when it comes to pricing options around what they spend on their medications has the potential to greatly impact both healthcare costs AND medication adherence. Consumers are self-educating when it comes to medical information now more than ever before – and are ready, willing and practically begging for information to be delivered online about real drug savings opportunities they can act on immediately.  At Change Healthcare we have discovered that pharmacy savings opportunities are “acted on” at a much higher rate than any other healthcare savings category. An investment in technologies and new health plan designs that offer patients a window into savings around prescription costs has the potential to greatly increase patient adherence – and ultimately, create a healthier, more cost effective healthcare system.

Since the advent of Penicillin, Americans have developed an unfortunate expectation for healthcare – a “magic bullet” drug or procedure that makes their immediate healthcare concern go away. Consequently, our healthcare system works pretty well for acute problems, but doesn’t address the real illnesses of our aging population and the fundamental cost drivers behind our nearly bankrupt healthcare system – treating, managing and preventing chronic diseases such as heart disease, diabetes, cancer and Alzheimer’s.

A recent post in The New Health Dialogue reinforces this point, calling for an integrated plan that attacks the healthcare cost problem in slices – controlling overtreatment, improving coordination of care, reducing failures that lead to hospital-acquired infections, reducing administrative cost and eliminating waste, and identifying fraud and abuse within the medical system.

While the blog offers a partial solution, the “magic bullet” actually lies in promoting strategies such as consumer-driven healthcare. The answer to the cost problem is not a policy band-aid, or even an entire wedge of policy band-aids. Even though all of the issues listed above are important, the government rarely harnesses the power of personal responsibility or the aggregate shopping prowess of American women who are responsible for more than 80 percent of healthcare purchasing decisions. In fact, policy often creates incentives to continue the exact behavior that created the cost problems in the first place (administrative cost and overtreatment).

My husband recently received a referral for a shoulder MRI by his physician who strongly believed the he suffered from bursitis. Our insurance provider’s utilization management company approved the service, so why not proceed with the MRI?  As a cost-conscious family, with a consumer-driven plan, we thought we should look for better-cost options. In a five-mile radius, we found costs varying from $470 to more than $2,500. So we made a family healthcare budget decision (read: the wife’s strong recommendation) to treat the bursitis, and if that didn’t relieve the issue, then we’ll explore other options. That is just one tangible example of the power that consumerism can, and will play in addressing runaway healthcare costs.

Next week at the 24^th Annual Benefits Forum and Expo in Dallas hosted by Employer Benefit News, I’ll be presenting on a necessary transformation that’s already underway – changing healthcare users into healthcare consumers.

We know that price tags don’t exist when it comes to most healthcare services. So, the average American simply can’t compare prices for prescriptions and other medical and dental services as they can for almost any other good or service. At the grocery store, I’ve been surprised to see costs for common items inching up year-after-year, but it scares me to think that medical costs are skyrocketing at twice the rate of inflation. It’s easy to understand why many Americans are willing to gamble with their health by choosing to avoid costly prescriptions and routine tests simply because spending the money could stretch the monthly budget too thin.

From an employer perspective, Randall Abbott of Towers Watson stated it best: “2012 will be a defining year – employers will head down a path of bold and decisive action.” In any scenario, the expected cost hikes for 2012 are hitting at the worst possible economic time. Uncertainty and low confidence across the corporate spectrum has businesses readjusting their benefit plan offerings, asking employers for higher contributions with less coverage.

To minimize the effect this has on hard-working employees, companies large and small need to communicate the success of consumer-directed healthcare plans coupled with healthcare cost information made available by a variety of vendors. Adding tools and services for employees to understand and act on cost-savings opportunities allows them to ease the sting that higher premiums and deductibles bring.

We know that having these kinds of tools will actually drive selection of and the satisfaction with the CDHP option, saving the employer and employee hundreds of dollars in healthcare expenses annually. Our client experience tells us that the public is hungry for healthcare pricing information, and ready to become smart healthcare consumers.

See you in Dallas!

-Christopher

In the next few months, millions of employees nationwide will receive their annual notifications to renew or amend their employer-provided health coverage. And, for a large portion of them, a hefty premium increase will be part of “what’s changed.” In the 16^th annual report, Employer Survey on Purchasing Value in Health Care, authored by Towers Watson and the National Business Group on Health (NBGH), healthcare costs are up almost $800 per employee this year topping more than $11,000 annually. Both employers and employees have seen considerable increases in their health costs in the past five years, with employers paying 36 percent more and employees contributing 45 percent more.

To offset the rising healthcare tab, a majority of large employers are planning to continue raising premiums. An NBGH study found that 53 percent of large firms intended to increase the amount of employee contribution. There are several drivers behind the increased cost ranging from poor employee health habits, to the lack of adequate pricing information. As a result, a majority of employers are stepping up efforts to get their workers to more actively manage their own health and expenses. As we mentioned in a previous blog, employee wellness programs are a component of an overall cost-reduction strategy, but utilization of these programs remains slim. In addition, the Towers Watson/NBGH survey indicated that employer confidence in health plan performance and employee-wellness engagement continues to shrink while uncertainty surrounding the health care reform law continues to grow. Next year looks like a tough one for HR professionals and employees nationwide.

Many Americans found themselves living paycheck to paycheck in 2011, making the expected premium hikes for the 2012 renewal period daunting. There is little doubt that more employees may say yes to lower-premium, high-deductible plans in 2012. Our mission is to ensure that companies who provide these plans have the tools to assist their workers to make smarter, more informed healthcare decisions with their hard-earned paychecks so that we can all live within our budgets.

The Wall Street Journal recently reported on the increasing healthcare cost burden shouldered by state and local governments. While the private sector has restructured employee contributions and shifted more toward consumer-driven health plans (CDHPs), a vast majority of the public sector has resisted passing the buck – government employees pay on average 15 percent of premiums with some states requiring no contribution. The Manhattan Institute, a well-known organization dedicated to individual choice and responsibility, estimated that governments could save $1,376 per employee by following the private-business model.

Realizing the power of CDHPs, states like Indiana have begun offering options with lower premiums and empowering employees to take on more responsibility for the cost of care. An astonishing 70 percent of employees moved to these plans, and a study by Mercer Consulting estimated that the state’s move saved Indiana’s taxpayers $23 million. Multiply that savings opportunity nationwide – and there are more than 18 million government employees in the U.S. today – and the overall savings potential is astronomical. A trend toward CDHP is likely to continue given the financial pressure the U.S. is under when it comes to health care. This perspective is certainly validated by the fact that 23 states already offer these types of plans, and a growing number of states are now pushing into the 40+ percent cost sharing category per a 2011 study published by the Segal Company.

What’s exciting is that the potential savings of moving to CDHPs at the government and state level can be enhanced once employees are empowered with the right information to understand how to intelligently shop for their healthcare. The example of an employee like TaKeisha Woodson should and can be replicated across every public-sector employee. As the U.S. Postal Service and other state and local government entities join the heated debate over rising healthcare costs, change is certainly on its way …

In an interview with the Houston Chronicle, Humana CEO Michael McCallister, provides his view of healthcare cost management from disease management and wellness to cost transparency. He begins by noting that many companies and health insurance providers now offer employer wellness programs that promote and incentivize healthier lifestyles. With the goal of curbing healthcare costs, these programs utilize a myriad of tactics that include weight and chronic disease management services, regular biometric screenings and reward programs to motivate employees to identify, control and mitigate against costly medical issues.

While these programs are a critical piece of the healthcare cost puzzle and ultimately should have a positive impact on healthcare costs in the long term, McCallister touches on a more near-term issue as well – the fact that consumers lack adequate information regarding cost and quality.

If one looks back at how healthcare was purchased and consumed historically, the insured put their faith in their employer, took comfort in the fact that they had extensive benefits and left the price negotiation to the insurance companies. However, times have changed and as employers shift an increasing portion of their healthcare costs to their employees, the need for individuals to become savvier consumers continues to grow.

Unfortunately, the information required to “shop” for one’s healthcare is not easily available. I like to think about it in the context of purchasing a gallon of milk – regardless of how familiar I am with what a gallon should cost, as long as it is somewhere between $2 and $4, I’ll make the purchase. However, if the gallon of milk costs $37, that’s going to raise an eyebrow (even to an unsophisticated shopper such as myself) and likely influence my buying decision.

It’s these types of variances, sometimes more than 700 percent for basic services and medications, which reinforce the need for cost transparency in healthcare. Not only does greater transparency offer immediate savings for employers and consumers, but it also forces the entire industry to take a long, hard look in the mirror at what things cost, the relationship between cost and quality and whether the same service or medication might be available elsewhere for less.

Young families are having an increasingly difficult time staying on budget in this tough economy, where each unexpected expense can cause an uneasy shuffling of priorities – especially when it comes to healthcare. One recent survey from the National Foundation for Credit Counseling found that 64 percent of Americans couldn’t handle a $1,000 emergency. To show how the average American is handling such costs, Anna Mathews’ personal finance column in Sunday’s edition of the Wall Street Journal showed us how TaKeisha Woodson, a credit analyst, saved nearly 50% on a prescription simply by taking advantage of change:healthcare’s Ways to Save Alerts™. But there is much more to TaKeisha’s story.

First Horizon National Corporation is a self-insured employer that offers the change:healthcare cost-comparison tool to its employees. TaKeisha is married to a school teacher, has two young children, and just like most growing families, she must juggle the challenges of making smart purchasing decisions with the need for quality care. In addition to the savings referenced in the WSJ, in May of this year her ten-month-old son became sick and was prescribed antibiotics by his pediatrician. TaKeisha arrived at the pharmacy to pick up her son’s prescription and was shocked to see a $100 price tag for a basic antibiotic. Instead of simply accepting the price at the pharmacy, TaKeisha knew she had options. Once she returned home, she logged onto her computer and using the change:healthcare Cost Lookup™ tool, found the same medication at nearly half the cost at another nearby pharmacy. In addition, with the change:healthcare cost comparison tool, TaKeisha will continue to receive proactive e-mail alerts on her routine prescriptions and doctor visits, letting her know how she and her family can save money in the future.

Her story is a testament to the power of actionable cost transparency – and it is just one of many. Through access to pricing information and a proactive outreach strategy that helps consumers take advantage of savings opportunities, TaKeisha is one of thousands of employees who are able to maximize the value from their healthcare benefit.

It definitely makes you wonder how much our healthcare system could save if everyone had access to the same tools as TaKeisha. Stay tuned for more savings stories from patients and employees …