As employee benefits consultants, we take our responsibility seriously to educate employers and employees on resources available to help reduce employee benefits program costs and out-of-pocket healthcare expenses.
This is especially true for those enrolled in High Deductible Health Plans (HDHPs), but even for those who aren’t. For without any effort, as a collective, to become more price-conscious consumers, healthcare providers will have no reason to reign things in.
In a recent blog, we discussed how consumers can save on prescription medications, including comparison shopping, manufacturer rebates and discounts, drug substitution, pill splitting, bulk buying, mail-order, and more.
As a complement to that blog post, today we’ll discuss various ways consumers can save on healthcare services and procedures. After all, when combined, hospitals and physician/clinical services account for 48% of healthcare expenses.
With nearly half of medical expenses centered around these areas, it makes sense for healthcare consumers to focus on these cost centers as target-rich environments for possible savings.
WHY HDHP PLAN PARTICIPANTS ARE MORE MOTIVATED TO CONTROL COSTS
While the main benefit to HDHP plan participants is generally cheaper health insurance premiums (36% cheaper, on average), a trade-off comes in the form of higher deductibles and higher out-of-pocket maximums.
While more financially savvy employees will gauge their satisfaction with this type of health plan by looking at their total out-out-pocket costs at the end of the plan year (premiums, deductibles, copays, and coinsurance), some employees migrating to these plans may find the change in expense flow a bit jarring.
Because deductibles need to be fully satisfied before copays and coinsurance kick in, participants in HDHPs often feel as if they are spending more on healthcare. This sensation arises because they are initially paying for services “out-of-pocket,” often failing to recognize that their paycheck deduction for health insurance premium was reduced for the entire plan year, to account for this.
That said, the math doesn’t always work out this way. Frequent consumers of healthcare services, especially those who incur these expenses early on in the plan year, will often be spending more on healthcare than they might have otherwise (had they been enrolled in a non-HDHP). And it is, unfortunately, possible that the savings in medical premium might never catch up to their increased medical expenses.
This is why we often stress that HDHP’s aren’t for everyone.
HEALTHCARE PRICE TRANSPARENCY
Can you imagine how different our shopping behavior would be if we knew what healthcare services would cost in advance? In this day and age, it’s hard to think of another industry where the consumer knows so little about what they are buying and only finds out after services have been rendered (or never at all).
That’s why we have championed healthcare price transparency for years now, and fortunately, as a nation, we are finally making great strides in that direction. We believe healthcare pricing transparency will significantly bring down runaway medical care and prescription drugs costs. This will help both employers and employees save money while empowering consumers with the information they need to take better control of their healthcare spending.
In a previous blog post, we addressed several steps both the Trump and Biden administrations have taken to bring about greater healthcare and prescription drug price transparency. And why some institutions and providers are unfortunately finding ways to circumvent these efforts, we are still hopeful that pricing transparency in all areas of healthcare will continue to improve.
Healthcare solutions like aggregation tools, hospital pricing calculators, and high-performance networks help employees see costs, quality metrics, and other important information in one place, leveling the playing field and allowing consumers to make informed healthcare decisions.
Solutions like these are akin to game-changers like Travelocity, Expedia, Kayak, Carfax, Truecar, and Edmunds. Just think of how each of these online aggregators completely up-ended the airline, hotel, car rental, and car buying industries. These services aggregated data across dozens of providers and put the buyer on equal footing with the seller in terms of product information, thereby leveling the playing field.
Healthcare Pricing Calculators
Here are some of the more notable healthcare pricing tools that are empowering individuals with the ability to understand their healthcare options and costs.
Healthcare BlueBook’s quality-cost navigation system, BlueBook’s Fair Price + Provider Quality, makes it easy for enrolled members to identify fair price providers and compare quality rankings. One of the oldest and most extensive medical pricing sites, Healthcare Bluebook collects data from patients, insurers, and companies to calculate a “fair price” for various procedures across the country.
Employees can enter their zip code to identify which options in their area are at or below the “fair price”, searching by procedure, physician, or facility. Employers can participate in Healthcare Bluebooks services to reduce employee medical spending and improve employees’ quality of care by educating them on best practices and rewarding them for cost-effective healthcare choices.
Healthcare Price Tool
Healthcare Price Tool allows employees to price-compare hospitals, urgent cares, doctors, and procedures. Healthcare Price Tool lets employees price-compare options in their area and set expectations for what they will pay before insurance by reviewing historical billing records from patient visits. Patient reviews of providers help employees select quality providers at affordable rates.
Clear Health Costs
Clear Health Costs is a journalism company from New York City bringing transparency to the health care marketplace. They do this through deep-dive investigative consumer-benefit projects revealing health costs in their local areas and communities. With consumer-friendly partnerships with other newsrooms, they can bring this information to the communities they serve. In addition, their community-created guide allows consumers to provide pricing insights into their procedures as well as search pricing on 35 ‘shoppable’ procedures with coverage most heavily in New York City, New Jersey, San Francisco, Los Angeles, Miami, Tampa-St. Pete, Philadelphia, and Dallas--Fort Worth.
MDSave is an online shopping tool for healthcare. With MDSave, consumers can compare local prices, save money and buy procedures all in one place. By searching their site for local procedures and providers, they can find the best and most affordable option then proceed to pay through MDSave or buy the procedure at the facility before the appointment is scheduled. They have 2,788 providers across nearly all states, and top procedures include colonoscopies, CT scans, mammograms, MRIs, ultrasounds, and X-rays.
Fair Health Consumer
Fair Health Consumer allows employees to search for medical, hospital, and dental care services and compare and estimate costs. In addition, there are resources to help employees get covered or pay for care and provides educational content on insurance basics.
Hospital Pricing Calculators
With more transparency into shoppable procedures and pricing, employees can now vet hospitals using hospital bills, government data, and publicly posted information. Here are three of the more notable healthcare pricing calculators.
New York Times Hospital Pricing Calculator
The New York Times created a pricing calculator with data released from the government on what hospitals charge Medicare for various procedures. Data includes bills submitted in 2011 by 3,300 hospitals for 100 of the most commonly performed treatments including hip replacements, heart operations and gallbladder removal, among others.
The Leapfrog Group
The Leapfrog group describes itself as a nonprofit watchdog organization serving as the voice for healthcare consumers and purchasers. From their Hospital Survey collecting data from hospitals to their letter grade system evaluating 2,700 hospitals and other solutions, consumers can evaluate and select services and facilities that are best for them.
Hospital Compare (Medicare)
Hospital Compare is a tool provided by Medicare.gov combining their eight original provider compare sites to help consumers compare nursing homes, hospitals, and providers in their area all in one place. Consumers can search by providers, location or specialty to find the information that is most important to them.
NOT EVERYTHING IS SHOPPABLE
While many procedures and services are shoppable, other health care services are not – and let’s face it, in some instances, consumers don’t necessarily want the most inexpensive treatment. After all, it’s one thing to price shop an MRI or torn ACL repair, but it’s another thing altogether to price shop for the cheapest cancer treatment or brain surgery.
In a future post, we’ll address other ways employers can help guide their workforce into making more informed healthcare decisions, beyond being guided just by price.
CONSUMERS DON'T ALWAYS CHOOSE THE LOWEST COST OPTION
It’s worth noting that even when services are shoppable, cognitive biases often lead consumers not to choose the cheapest option. Fortunately, these same biases also keep us from choosing the most expensive one as well.
Take the bias of central tendency. This is a phenomenon whereby we change our perception of two options when presented with a third. For example, a hamburger chain might leverage this bias to sell more double cheeseburgers. By introducing a triple cheeseburger, they draw more consumers to consider the double cheeseburger since, as human beings, we exhibit a tendency to select items in the middle, so as to avoid the extremes.
Advanced marketers also leverage another cognitive bias, more closely aligned with price manipulation, known as asymmetrical dominance. Simply put, this is a bias we hold that drives us, as consumers, to often select a slightly more expensive option, but only because it is so closely aligned with another rather expensive alternative. For example, movie theaters often put this to use by pricing their largest tub of popcorn for only a dollar more than their already expensive, medium-sized offering.
We’ll write more about how to leverage cognitive bias in employee benefits design and marketing communications in the weeks ahead. For now, we simply wanted to point out that as consumers, we don’t always select the cheapest option – nor the most expensive. We are very complex decision-makers, even though we can also be easily manipulated.
EMPLOYERS: PLAY A SUPPORTIVE ROLE IN COST SAVINGS
Employers have an important role to play in educating employees about their options and empowering them with the resources they need to save money. Consistent and effective communication that illustrates a commitment to their health and well-being is an essential component to a successful benefits program.
To the extent you can share these cost saving resources with your workforce, please do so. They will be thankful you did.
FOR MORE INFORMATION
Contact us for more information on how JP Griffin Group works with employers to help their workforces to become better-educated consumers of healthcare.