Online Tools Help Consumers Make Cost-Effective Decisions on Drugs, Routine Care

By Stephen Miller Nov 23, 2010

While the U.S. government provides some price information for drugs and procedures, those listings tend to highlight what Medicare and Medicaid are willing to reimburse, not what the services cost. Hospitals, doctors and insurance companies provide patients with an itemized bill for care—but only after the fact.

New tools are stepping into this price information gap. For example, the Healthcare Transparency Index, to be issued quarterly by the firm change:healthcare, aims to arm consumers with data about health care costs and trends—and to highlight cost savings opportunities.

The Healthcare Transparency Index includes U.S. data derived from more than 1.3 million medical claims, totaling $220 million, from 90,000 individuals across 50 states over 12 months. Key findings include:

Prescription drugs offer the highest opportunity for cost savings, followed by dental, routine primary care physician office visits, psychotherapy, physical therapy and chiropractic services.

Costs for commonly prescribed drugs can vary greatly for both brand names and generics, creating cost saving opportunities. A consumer of Abilify, a brand name medication for depression, could pay from $419.40 to $628.20 each month for the medication, depending on where the drug was purchased, and could save up to nearly $2,500 a year by making a pharmacy change. Lipitor, a brand name drug for cholesterol, ranges from $84.60 to $134.40 per monthly supply, while Simvastatin, ageneric cholesterol medication, ranges from $2.40 to $28.20 per monthly supply.

Wal-Mart, Target, Kroger, CVS and Walgreens top the list of pharmacy chains with the widest prescription cost discrepancies. In other words, these retailers were found to have widely varying prices for the same prescription depending on the store's location.

“The way health care costs are hidden from the people who need to understand them has to change,” said Christopher Parks, CEO of change:healthcare. “We created the Healthcare Transparency Index to highlight the most significant health care trends, and even more important, the cost savings opportunities that we believe every person should understand before they are forced to make important decisions about their care.”

Driving value for Consumer-Driven Plans

With more than 60 percent of employers in the U.S. expected to offer a consumer-directed health plan (CDHP) in 2011 as a way to curb costs, according to a July 2010 U.S. Government Accountability Office (GAO) report, employees and their families increasingly will be responsible for shopping and paying for their health care—making it more important for them to understand the costs involved. Companies in the U.S. that offer a CDHP include Microsoft, Kraft, General Electric and General Motors.

“As an economist, I believe a CDHP is the only version of health insurance that makes any economic sense, because in that model, the individual actually cares about the price of services when they're making the decision about what to consume,” said R. Lawrence Van Horn, associate professor of Healthcare Management and faculty director, Healthcare Programs, at Vanderbilt University’s Owen Graduate School of Management. “The main challenge that employers have with moving to CDHPs is educating employees and changing their mentality around the accountability—employees have to actually care about the health care costs they're generating and make sound and wise purchases."

Index Powered by the Cost Transparency Solution

Since 2008, change:healthcare has collected and analyzed more than 1.3 million medical claims to deliver opportunities for health care savings through its Cost Transparency Solution, an online portal that allows employees with CDHPs to compare costs, review options and select the care that works best for them. The solution’s "ways to save alerts" notify employees automatically of opportunities to save money on personal health care services, guiding them on how to make a switch easily to another pharmacy or physician in their area.

"It’s very difficult for every person to manage their own health care, due to the fact we have no visibility into costs of doctors, drugs and hospitals, and it’s even more confusing trying to decipher a bill after the fact,” said Marsha Paul, a technical analyst at Thompson Machinery. "With an understanding of what prescriptions, procedures and doctor’s visits actually cost, we can make those decisions about which physicians we see or which pharmacy can offer the best prices."

Stephen Miller is an online editor/manager for SHRM.

Related Articles:

Digital Health Coaching: Reaching Out to Older WorkersSHRM Online Benefits Discipline, November 2010

Incorporating OTC Drugs into Benefit Plans Can Lower Rx CostsSHRM Online Benefits Discipline, October 2010

Future Bright for Health Savings Accounts, Says Policy Analyst, SHRM Online Benefits Discipline, September 2010

Quick Links:

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SHRM Online Health Care Reform web page

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