August 11, 2017 - As out-of-pocket costs for patients continue to rise alongside payer spending on services, many health insurance companies are turning to online price transparency tools to help beneficiaries decide how to purchase low cost, high quality care. While price transparency tools are generally viewed as a cost-effective way for payers to trim spending, they may not be as effective as they could be. Low awareness and scant utilization rates are limiting the effectiveness of comparison shopping tools, says a new study published in Health Affairs, leaving payers without the savings they’re looking for. How can insurance companies improve their member engagement and financial education strategies to ensure that price transparency tools can cut spending on both sides of the equation? To better understand how price transparency tools are affecting healthcare spending, a team of researchers from Harvard Medical School and the Harvard T.H. Chan School of Public Health analyzed user data from Castlight, the CalPERS (California Public Employees’ Retirement System) commercial price transparency tool, offered to beneficiaries in the public employee Anthem PPO plan. They found that only 0.3 percent of lab tests and 1 percent of office visits and advanced imaging services were preceded by an online price search. And beneficiaries who searched for prices tended not to save much money. Adjusted average savings between users and non-users was approximately $2, the study found. Imaging services were a notable exception, however. Average imaging prices were $846 when preceded by a search and $967 when not preceded by a search. The adjusted price difference associated with searching for an imaging service was a 14 percent savings. “Price transparency tools may result in lower prices for a selected set of services, but the tools have little impact on overall spending because of the small percentage of people who use them,” the team explained. While the overall savings seem insignificant, price transparency tools could make a difference if payers change their engagement and messaging strategies, the researchers pointed out. According to the study authors, patients are more likely to act on price information if it is presented at the point of decision making instead of before booking appointment. Payers have also found early success by contacting patients with scheduled imaging appointments and encouraging them to switch to lower-cost providers, they added. Payers can improve their point-of-sale engagement through effective healthcare marketing and communications that make purchasing and price checking user-friendly. The research also suggests that payers can create positive price transparency experiences by combining price checking tools with alternative benefit designs. These alternative designs include reference-based pricing initiatives that cover services up to a given price, and hold the enrollee responsible for the remaining costs. Other alternative benefit designs include programs that offer cash bonuses to patients who switch to lower-cost providers. Large employers that provide health plans to thousands of employees are relying on similarly new benefit designs to drive general healthcare costs savings over the next few years. Employers that integrate price transparency tools into new alternative benefit programs could increase the effectiveness of comparison shopping options, according to the Harvard research. Ultimately, payers will not benefit from price transparency tools unless their beneficiaries access and utilize them, the study concluded. Online comparison options must be presented at the right moment in the healthcare decision-making process and should offer meaningful information to members looking to access quality care. “For price transparency tools to have a more substantive impact on spending, a much larger percentage of patients would have to use the tools, and there would need to be a broader array of services, in addition to imaging, for which patients could effectively use price information,” the Harvard team said.
As out - of - pocket costs for healthcare continues to rise alongside payer spending on healthcare , many health care companies are turning to online price transparency tools to help beneficiaries learn how to afford low cost , high quality care .