Blue Cross Uses Cash Rewards to Lower Costs
Kaiser Health News -- "In recent years, insurers have tried to cajole consumers into using less-expensive health-care providers by promising lower co-payments and other cost-sharing breaks for members who select those doctors and hospitals. Lately, they're trying an even more direct approach: cash rewards.
Some Anthem Blue Cross and Blue Shield members in New Hampshire, Connecticut and Indiana can receive $50 to $200 if they get a diagnostic test or elective procedure at a less expensive facility than the one their doctor recommended. The offer covers nearly 40 services, from standard radiology tests such as mammograms and MRIs to such surgical procedures as hip and knee replacements, hernia repair, bariatric surgery and tonsillectomies.
It seems to be working. The city of Manchester, N.H., the first employer to pilot Anthem's Compass SmartShopper program in January 2010, has saved more than $250,000 in health-care costs in two years, even after factoring in the cash rewards paid to the 476 members who have participated The differences in costs can be eye-popping. According to Anthem data, in Manchester a hernia repair ranges in price from $4,026 on the low end to $7,498 on the high end. A colonoscopy could cost $1,450 to $2,973.
The program is entirely voluntary. If the member wants to stick with his doctor's initial plan and forgo the cash bonus, no problem."
MP: Sure seems like a win-win situation, and helps overcome patients' general lack of concern about health care costs when only 10% of all medical costs are paid "out-of-pocket" by consumers and the other 90% are paid using "somebody else's money" (insurance, government, employers, etc.).
Update: See full article at the link above for the details of how the patients can find lower cost providers for various procedures to qualify for the cash reward.
HT: John Goodman
10 Comments:
Isn't this kind of shopping around exactly what doctors dont' want? At least one left-leaning doctor I interact with online claims that shopping around is dangerous because patients aren't as knowledgeable as doctors. They should be taught to trust their doctor explicitly.
Of course, if we didn't have such a bizarre health "insurance" system people would soon find the benefits of shopping outweigh their doctor's chiding.
How do people know what the competitive offerings are?
Also.. if you have a co-pay...doesn't that also encourage you to shop?
Also... what happened to "network"?
My understanding is that if you go outside their network - the co-pay goes up so you have to save a LOT MORE money....
but how are people supposed to "shop around" anyhow?
Larry G:
Read the full article at the link provided to see how patients know what the competitive alternatives are and how they are able to shop around for the lowest prices....
but how are people supposed to "shop around" anyhow?
Good question. A lot of places you can just call and ask how much procedures are. Also, some health care insurers will provide a website with different clinics in your area with their pricing. Of course, the options may be limited as to where you live (you'll have a lot more choice in Boston than you will in Northampton). But there is always the old tried-'n'-true method of Google.
Have you ever actually asked?
I have.. and they look at you like you've grown two heads.
I've gotten everything from "why do you want to know that" to "I suppose" to "I'm not sure we can do that".
And I got these responses in person. On the phone.. the answer is.. "we can talk about that once you make an appointment".
I just don't think it's realistic at all given the realities.
Some companies are required to provide a list of their services and costs - banks, cable , etc.
but as far as I know, medical providers do not.
Have you ever actually asked?
I have.. and they look at you like you've grown two heads.
Never said it was easy.
I do not doubt your story for one second. Medical providers do not like to give out their pricing information. You do have to negotiate. But, then again, I grew up just a 20 minute drive away from some of the best hospitals and clinics in the world, so it wasn't hard to say "if you won't tell me, then I'll just go somewhere else."
I'm currently uninsured and "shop around."
I needed some X-rays taken on my neck for a problem that I'd had for a few weeks. Went to a local clinic and asked how much they would cost.
Well, the very friendly women at the desk had absolutely no idea and were horrified at the fact that I was trying to order X-rays without a "script" from my primary physician. They said I'd be billed for emergency charges without that magic "script."
I'm a believer that the health care system can only be fixed with a healthy dose of capitalism, but I realize more and more just how far from that ideal we have departed.
MP: Sure seems like a win-win situation, and helps overcome patients' general lack of concern about health care costs when only 10% of all medical costs are paid "out-of-pocket" by consumers and the other 90% are paid using "somebody else's money" (insurance, government, employers, etc.)
Then why is it that the U.S. is rated so low in comparison with other countries, such as Switzerland and Taiwan, to mention a few. Where the insurance is with private entities and is required by governments. By low rating, I mean a much higher cost and a much lower quality? Your comment seems logical, but is it really?
Also Medicare is nationally controlled and is constitutional - or isn't it?
well.. think about WHERE Blue Cross is getting that "reward" money from.
in terms of "shopping around", Mr. Howard has also identified another issue.
You cannot self-diagnose.
You have to see a medical provider first to receive a diagnosis but you also have to receive a lawful order for the treatment BEFORE you can "shop around".
This kind of demonstrates the simplistic and unrealistic view about how medical care really works verses those who say ... just shop around...
"Also.. if you have a co-pay...doesn't that also encourage you to shop?"
Only if you can find a price lower than your co-pay. Otherwise you pay the same price - your co-pay - wherever you go. You have no incentive to shop for lower cost.
"Also... what happened to "network"?"
The "network" consists of those medical service providers who agree to accept your "insurance plan" as payment or partial payment. If you go to a provider who doesn't, say in an emergency or while traveling, your "insurance plan" may pay the provider, but it may be less than the provider will accept as full payment, so you will pay the difference.
"My understanding is that if you go outside their network - the co-pay goes up so you have to save a LOT MORE money...."
You may want to check with your "insurance plan" as to how that works. Any price negotiation with a non-network service provider would be up to you.
"but how are people supposed to "shop around" anyhow?"
The same way they shop around for auto repair or any other service. Ask friends, neighbors, co-workers for recommendations. call the business and ask.
Insurance/billing people in doctors offices are not used to being asked for prices, and it's a different amount based on your coverage plan. The price for your service will depend on your plan.
"well.. think about WHERE Blue Cross is getting that "reward" money from."
They are getting it from the amount they DON'T pay to your doctor because you found a cheaper price. They are sharing the savings with you.
"You cannot self-diagnose."
Huh? If you suspect you need medical treatment, you can shop for an initial doctors visit. If the doctor recommends x-rays, you can shop around. Blood tests? Shop around.
When the doctor recommends a bucketload of tests and procedures, ask what you might expect to pay for each one, and what it will do for you. And if one is expensive, ask if you really need it, and whether there's something else that's adequate that costs less.
What would you do if your car needed major work?
Would you say: "I don't care what it costs, because I have auto repair coverage that only costs me a $20 co-pay no matter what the actual cost."
You have to see a medical provider first to receive a diagnosis but you also have to receive a lawful order for the treatment BEFORE you can "shop around".
No you don't, you only have to know what is being recommended.
It's no longer easy to do this, because 3rd parties cover most of the costs, but it is one of the major causes of high medical prices. Incentives matter.
"This kind of demonstrates the simplistic and unrealistic view about how medical care really works verses those who say ... just shop around..."
What is "this"?
Before WWII, medical treatment was paid for in cash and was subject to normal market forces like every other service. Government interference has removed the control that markets had on prices.
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