Skip to main content

Analysis

Employers Rewarding Patients for Choosing Lower-Priced Providers

By Jack O'Brien  
   March 04, 2019

Implementing a rewards programs program for employees who utilize low-priced provider options has proven effective.

Employers who pay for their workers to choose lower-priced providers have experienced notable savings, according to a new RAND study published in Health Affairs Monday afternoon.

Starting in 2017, 29 providers implemented a rewards program for more than 131 elective services whereby patients who received care from a lower-priced provider would collect a check ranging from $25 to $500.

After the first year, the study's researchers saw a 2.1% reduction in prices paid, resulting in $2.3 million in savings. It should be noted that these results were primarily centered around imaging services rather than surgical procedures, which did not experience a significant reduction.

Related: Rising Prices Lead to All-Time High Healthcare Spending

Among patients who shopped prices through the rewards program, MRIs experienced a 25% drop in prices on average, ultrasounds fell 78%, and mammograms declined 33%.

Christopher Whaley, associate policy researcher at RAND Corporation, told HealthLeaders that since imaging procedures are considered commodity services, patients care less about where they go for those procedures as compared to surgical operations, which are more personal.

He added that the study's findings indicate that high-priced providers are in for a challenge to their existing business models if this trend continues, while low-priced providers stand to benefit.

"We haven't looked at the provider side right now, but you can imagine that if you're a provider in a geographic area where a lot of players are doing this, it will impact your bottom line," Whaley said.

This is the first study looking at this approach to rewarding cost-effective choices in healthcare procedures, according to Whaley, though he said it is alreayd growing in popularity as nearly 900 providers implemented this strategy by the end of the study.

What also makes the study unique is the inverse approach to the traditional ways employers have urged employees to embrace lower-priced providers.

Whaley said that instead of utilizing reference pricing or penalizing employees for choosing higher-priced providers, employers have implemented a 'carrot-stick' method to get the results they're pursuing.

The study concludes that the onus for price-shopping falls on the patient but separates them from the risk of increased out-of-pocket spending associated with other experiments targeting similar goals.

Related: 4 Reasons the Reimbursement Environment Grows Thornier

Despite the study's findings and clear preference among employers to implement a rewards program, reference pricing methods actually resulted in average savings of 15%, according to RAND, suggesting this might be a more effective approach for noticeable savings.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


Get the latest on healthcare leadership in your inbox.