Consumer-Driven Care Seeks New Directions

Relying on consumers to “drive” down overall health care spending has veered off course

By Greg Goth April 11, 2016

More than a decade ago, “consumer-driven care” emerged as one of the hallmark ideas in slowing the growth of health care spending. Patients with more financial responsibility for their care would be more prudent about how much was spent, or so went the logic behind the concept.

If recent developments are any indication, however, the strategy of relying on consumers to “drive” the overall direction of health care spending down appears to have veered off course.

David Lansky, CEO of the Pacific Business Group on Health, a 60-member consortium of health care purchasing organizations dedicated to improving quality and affordability, called it both a “moral and economic imperative” to provide health care consumers with the most complete information possible to enable them to make wise decisions. But Lansky also admitted that, by and large, attempts to meet those imperatives have not succeeded.

Bellwether Signals?

Since the start of 2016, two events have underscored the less-than-overwhelming results that consumer-driven health care has delivered.

  • 20 large U.S. employers announced they were forming the Health Transformation Alliance (HTA). Calling the nation's current health care system unsustainable, the members—many of which offer their employees cost-comparison tools—said “the companies have done as much as they can to improve the system individually.” The HTA will launch pilot projects in 2017 to help employees collectively negotiate for more affordable prescription medications, with other major initiatives planned to begin in 2018 or later.
  • A report entitled Spending on Shoppable Services, released by the Washington, D.C.-based Health Care Cost Institute, a nonprofit organization, concluded that only 7 percent of total U.S. health care spending by insured consumers was done on “shoppable” health services, where consumers are able to make choices based on quality and cost factors. Altogether, just 15 percent of health care spending was paid out-of-pocket by consumers.

David Newman, HCCI’s executive director, explained that he recently underwent a course of treatment for skin cancer, and shopping around was the last thing he wanted to do. Instead, he followed the customary pattern of relying on referrals from his health providers. “For many consumers, these are one-off experiences, and we just won't develop the expertise to become ‘uber-consumers,’” Newman said.

As an alternative to relying on patient consumerism to hold down costs, Newman noted that employers, insurers, professional associations, health systems, and states as regulators have bulk data available, and by analyzing and acting on it, they are better equipped to drive the cost-quality equation.

Tool Deployment Continues

The drive to supply more consumer tools has not ceased, however, with more offerings becoming available from private-sector vendors, state insurance departments, and public-private partnerships.

For Jacksonville, Fla.-based Acosta Sales and Marketing, finding the best tools for employees is a work in progress.

“The availability of price transparency tools through insurers has significantly improved,” Lori McGraw-Baker, vice president of Acosta's total rewards program, said. “For the past several years, our health insurance carrier has provided our associates [employees] with the ability to compare prices for more than 600 medical procedures. Associates can personalize the cost of services to their plan and out-of-pocket limits.”

However, McGraw-Baker said, a tool designed to help further drive individual savings fizzled.

“In 2014 and 2015, Acosta piloted an enhanced transparency tool to provide notifications of missed savings opportunities,” she explained. “The notifications were perceived as confusing, so we discontinued this tool, and we are currently evaluating price transparency programs for future use.”

Among those who research the data underlying price/quality comparison tools, there is an increasing awareness that, while these tools are marketed for consumers, the transparency has a larger impact on health care providers and payers (employers, insurers and government programs), and may offer greater payoff there.

“I've often thought that the purpose of providing this information is way beyond the consumer,” Doris Peter, director of Consumer Reports' Health Ratings Center, said. “It's really to get providers on notice that we are aware of the differences in amounts being negotiated, and this is true not just for cost, but for quality information, too. A lot of what we do is promote accountability—‘Hey, we’re on to you that this”—overcharging—“is happening.’”

Publically Gathered Data

Consumer Reports recently partnered on such a tool with the California state insurance department; California Healthcare Compare is a website that provides hospital and medical group cost and quality metrics in the areas of maternity care, hip and knee replacement, back pain, colon cancer screening, and diabetes.

The site reveals estimated regional costs for more than 100 different medical procedures or conditions, ranging from appendicitis to prostate cancer. Truven Health Analytics supplied claims data for more than 10 million Californians from 2010-2013; Truven also has 22 business customers with more than 20 million users of its Consumer Advantage decision support suite, including a treatment cost calculator drawing on data underlying 40 million covered lives nationwide.

New Hampshire’s statewide NH HealthCost website, launched by the state insurance department in 2007—and the department’s status as a neutral data aggregator using a clearly stated methodology—has helped improve transparency, according to Tyler Brannen, a health policy analyst at the department. For instance, Brannen said, a high-cost hospital made "major concessions" in negotiations with payers, "largely because of this publicly available report that was not done by an insurance company." Another hospital was promoting lower costs of its mammogram services, but left out radiology reading fees, which led to an "apples and oranges" comparison.

“So there's an advantage in having a single neutral source, such as the insurance department, that uses the same methodology regardless of the provider, regardless of the insurer,” Brannen said. The department is currently in the planning stages of offering state-based employers an interactive version of its annual report on the state's health insurance marketplace.

Yet even publicly gathered data is often not granular enough—or is too disparate—to provide information a consumer might find useful. In New Hampshire, which has provider-level data, Brannen said significant cost variation between individual patients for some procedures, such as C-section births, made providing an estimate that would be valid for most people difficult. Moreover, the data on California Healthcare Compare is available only at the regional level.

"Without changes in the law, access to provider-specific payment information requires the cooperation of insurers and health care providers—and these organizations have been unwilling to allow us to share their data with you,” California Healthcare Compare’s developers told Consumer Reports.

Even states with mandated all-payer claims databases are finding it difficult to provide comprehensive information. The U.S. Supreme Court recently ruled in Gobeille v. Liberty Mutual that states may no longer require self-funded plans to submit claims data; the Employee Retirement Income Security Act (ERISA) pre-emptions prevail in such a situation, and any changes would have to come from the federal government, not the states individually.

"There's no uniform answer," Lansky said. "Just within our membership [at the Pacific Business Group on Health], there is a wide range of strategies being contemplated, shaped by their belief system and sometimes their industry segment and positioning. Businesses with a lower-income, high-turnover workforce or a highly distributed workforce are different than an industrial workforce. I see it as a time of creative experimentation and a lot of discussion among employers about what they are learning in order to ferret out more effective strategies.”

Greg Goth is a freelance health and technology writer based in Oakville, Conn.

Report: Cash Incentives Promote Health Care Shopping

Employers saved an average of $625 per procedure after making incentive payments to employees to promote shopping for services at high-quality, lower-cost health care facilities, according to a look at the shopping activity and savings achieved by consumers using Vital’s SmartShopper platform, a health care incentive and engagement program.

Many of the routine procedures being shopped were fully covered under health plans, meaning people were shopping even when they didn’t have a financial stake other than the cash incentive payment. Colonoscopy shopping rose 14 percent among those receiving incentive payments, while mammography shopping was up 12 percent.

“When the service and the quality are the same, there’s no reason to choose the higher-priced service,” said Rob Graybill, vice president of SmartShopper. But the likelihood they’ll do so depends on “allowing consumers to share in the savings they produce for their employer or health plans. Even consumers who’ve met their deductible have a reason to choose the better value provider when it’s tied to a cash incentive.”

-- SHRM Online

Job Finder

Find an HR Job Near You
Search Jobs
Post a Job


Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 10,000 companies

Search & Connect