Effects of transparency tools tough to determine

September 1, 2007

If we are treating healthcare as a commodity, then why not determine its real value? That might be more easily said than done, but as more and more consumers demand transparency in healthcare, payers, providers and pharmacy benefits managers (PBMs) are sharing information on the cost of treatments, screenings and drugs.

IF WE ARE TREATING healthcare as a commodity, then why not determine its real value? That might be more easily said than done, but as more and more consumers demand transparency in healthcare, payers, providers and pharmacy benefits managers (PBMs) are sharing information on the cost of treatments, screenings and drugs.

The problem however, says Sander Domaszewicz, head of health consumerism for Mercer Health and Benefits in Newport Beach, Calif., is whether cost information should be offered without quality and efficiency data-all integral pieces of the healthcare pie. He also is concerned that providing the cost of a service doesn't correlate with total healthcare costs.

"There is stakeholder pressure to keep costs a secret to maintain a competitive advantage," Domaszewicz adds, "and sharing costs may cause dissent among physicians. It takes time, energy, dialog and a socialization process to share cost information. On the other hand, consumers expect to know what the actual cost of a service is even if they don't pay the actual price."

"If physicians see that some of their peers are getting paid more based on negotiations with insurers, they may drop out of a network," he says. "Transparency is overrated; it only makes sense before a plan member reaches his or her deductible. After that, the insurer is paying for healthcare." Pointing out that claims under $2,000 are where consumers have the most choice, Farwell is worried that the tool will not recoup enough on nickel and dime procedures.

A number of insurers have developed Web sites that allow members to glean a variety of information on price. Methodologies range from estimated costs for a variety of common conditions, drugs, diagnostic tests, office visits and select outpatient procedures to more robust offerings.

THE ENTIRE EPISODE OF CARE

The Anthem Cost Comparison tool provides consumer access to total estimated costs-minimum and maximum agreed prices-associated with the entire episode of care for nearly 40 specific, elective, non-emergency medical procedures performed at local hospitals. In addition, the tool helps members determine their actual out-of-pocket costs based on copayments and coinsurance. Cost and quality information is generated from claims over a 12-month period and is updated quarterly.

Ken Goulet, president and CEO, Anthem national accounts, says the cost comparison tool is in response to requests from employer groups and is aligned to increase consumer engagement and cost-sharing. Anthem first offered the online tool to 300,000 General Motors employees as a pilot program last year; it is now available in five Midwest markets and should hit all markets by the end of 2008.

Pilot participant surveys indicate that 90% believe that the tool is valuable, and 84% say the tool increases their ability to make informed decisions regarding their healthcare.

"The costs are not just a line item but the entire spectrum of care," Goulet says.

Louisville-based Humana utilizes a similar tool called the Information Procedure Cost tool, which includes hospital and physician costs, factoring in Humana discounts. Expected this fall is a similar tool that presents the estimated cost of routine conditions performed at physician offices, capturing the cost of office visits, lab work, and prescriptions.

Denny Jones, product design consultant, Innovation Center, Humana, says cost tools should offer easy access by and relevance for users so that they can plan their healthcare budgets. For example, many older members who are not Web-savvy may be directed to a call center to receive cost information.