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How employers save money by paying employees to shop for healthcare

Paying employees between $25 and $500 for using a transparency tool can result in modest savings of about 2.1 percent.

Jeff Lagasse, Associate Editor

Providing healthcare benefits to workers is getting more expensive for employers, a situation that has them scrambling for solutions. One approach has shown promise: Give them money to shop around for healthcare services.

According to a new RAND Corp. study published in Health Affairs, paying employees between $25 and $500 for using a transparency tool, and encouraging them to select a lower-cost provider for certain elective healthcare services, can result in modest savings of about 2.1 percent over the course of a year.

That's not a ton of money, but it's something, and with the cost of providing benefits on the rise, employers are starting to consider it as an effective cost mitigation strategy.

IMPACT

The research looked at insurer Health Care Service Corp's rewards program, which 29 employers have offered to roughly 270,000 workers enrolled in PPO plans in 2017. The program was grafted onto the employers' existing benefits plans.

Available for more than 130 elective medical services, from knee replacements to MRIs, the program encouraged employers to pay workers $25 to $500, depending on the service and its cost, with the use of a price transparency tool (or a rewards advice line) a prerequisite for eligibility.

Slightly more than 8 percent of workers used a price transparency tool, and about 23 percent of those patients were given a reward payment for going with a lower-priced option. Among patients in PPO plans, 1.9 percent received the reward payment.

As patients switched from higher- to lower-cost providers, employers saved about $8per member -- translating to about $2.3 million in savings overall.

There weren't big changes in the prices of surgical procedures or CT scans, but MRI prices dipped about 4.7 percent, ultrasounds 2.5 percent, and mammograms 1.7 percent. Employers who shopped around saved big: 78 percent on ultrasounds, 33 percent on mammograms, and 25 percent on MRIs.

The study only examined the first year of the program. Enrollment nearly doubled the following year, likely accompanied by a spike in savings.

THE TREND

Many employers expect healthcare costs will continue to rise, and they're employing a variety of strategies.

An October survey shed light on some these strategies, finding that 85 percent of the 687 employers surveyed plan to focus on clinical conditions, improving health and reducing costs for key clinical areas such as cancer, diabetes, maternity, mental health and musculoskeletal disease.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com

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