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Offering price transparency tools does not equal lower healthcare spending, JAMA study says

After companies offered employees price tool, spending actually increased and use of the tool was minimal, study finds.

Beth Jones Sanborn, Managing Editor

Photo by <a href=""> Finesse </a>Photo by Finesse

It takes more than just offering employees a price transparency tool to get them to use it, let alone change healthcare spending, says a new study from the Journal of the American Medical Association.

The study sought to measure whether having access to such a tool, and with it more price information, was associated with a reduction in annual outpatient spending in the first 12 months after the tool was introduced. Despite swelling interest and demand for price transparency in healthcare overall, the study's results showed that simply offering such a tool is not enough to spurn its use, affect spending or save the employers money.

The authors of the study, published in JAMA in early May, used two large companies who have a presence in multiple regions across the country and who both offered the Truven Treatment Cost Calculator to their employees. The tool gave employees information about what they would pay out of pocket for services from different physicians, hospitals or other care facilities. One company introduced the tool on April 1, 2011 and the other on January 1, 2012. They compared data from those two groups with a control group who was not offered the price transparency tool.

Results showed that in the first year that employees had access to the tool, only 10 percent used it at least once to obtain a price estimate, and only eight percent used it at least three times. 3 percent used the tool at least twice, with at least 30 days between each search.

[Also: Transparency key to reforming prescription drug marketplace, says Campaign for Sustainable Drug Pricing]

Average outpatient spending among employees offered the tool was $2021 in the year before the tool was introduced, and $2233 in the year after. In comparison, among controls, outpatient spending went from $1985 to $2138, the study said.

Average outpatient out-of-pocket spending among those offered the tool was $507 in the year before introduction of the tool, and $555 the year after. Among the comparison group, outpatient out-of-pocket spending rose from $490 to $520. That boiled down to an increase of $59 in outpatient expenses per employee per year and an $18 increase in outpatient out-of-pocket spending for those who were offered the transparency tool, the study said.

Researchers said low utilization rates are common for transparency tools, and in fact is the most commonly reported challenge by insurers who offer them. Also, price shopping is most useful for non-emergency care or lower cost-services. They cited recents reports that indicated only 40 percent of healthcare spending is related to "shoppable services". One of the more shoppable services is clinician office visits, but since many people have relationships with certain doctors, they may decline to shop around despite potential savings. Finally, the tool could backfire for employers whose employees equate higher prices with higher quality, and use the tool to find higher priced physicians believing they are better, the authors said.

[Also: Price transparency an important factor in cutting healthcare costs, study finds]

They suggested transparency tools could be more effective if they were coupled with plans that offered incentives to receive care from less expensive physicians.

"Bonus programs in which patients receive incentives if they receive care from less expensive clinicians or facilities may also increase patient interest in price data. Proactively contacting patients and providing information about less expensive care may be more effective than passively waiting for them to seek this information on their own via a website," the authors wrote.

Twitter: @BethJSanborn

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