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Some health insurers are giving members cash rewards when they choose less-expensive healthcare providers or have procedures or tests performed at lower-priced facilities.
Health Care Service Corporation, a health insurer in Chicago, is one of them. Its member rewards program is available through its “Provider Finder” tool and customer advocate resources, making it simple to compare costs for procedures and see which facility selections will lead to rewards, says Tom Meier, vice president of Market Solutions.
In return for choosing a more cost-effective, quality facility, members receive a check ranging from $25 to $500 depending on where they receive care. The greater the savings, the greater the reward, says Meier.
Priority Health a health insurer based in Grand Rapids, Michigan, is another example. It has a “cost estimator” tool to inform members what their specific out-of-pocket costs will be based on their plan benefits, and how they can potentially save money.
Savings generated for members depend on their plan, how much they have paid toward their deductible, and if they have a coinsurance amount, says Nathan Foco, senior director of Market & Sales Intelligence. If the member has a high-deductible plan and hasn’t met the deductible, the savings applies to the member only. If the member has met the deductible, then Priority Health and the member split the savings.
Members receive a Visa gift card with $50, $100, or $200 depending on the procedure and facility selected. Procedures such as total cataract surgery, shoulder and knee arthroscopy, and ear tubes fall within the $200 rewardable category; magnetic resonance imaging, heart echo imaging, and Doppler heart exams are in the $100 category; and computed tomography and bone density scans are in the $50 category.
Give a little, save a lot
Insurers could reap big rewards for helping patients make more cost-conscious decisions, says Stuart Hanson, senior vice president and general manager, Consumer Payment Solutions, Change Healthcare, a healthcare technology company. “An insurer may recognize reduced recovery time, improved overall results, fewer return visits to the emergency room, and so forth from a certain provider that could result in improved outcomes for the patient as well as reduced expenses for both the patient and insurer.”
Some insurers are also using incentives to meet volume commitments to specific healthcare providers, especially for certain higher-volume procedures, Hanson says. They typically put these arrangements in place with high-quality providers for services like frequent diagnostic procedures such as laboratory testing or diagnostic imaging.
In the three years since launching its cost estimator tool, Priority Health has saved $7 million in healthcare costs and has distributed $1.2 million in cash rewards. “We believe that the more informed, and therefore engaged our members are, the better their outcomes will be,” says Foco. “If we didn’t offer cash incentives, we wouldn’t get the level of engagement that we have.”
Use of the cost estimator tool has steadily increased to 10% for group and individual members, including those with marketplace plans, and exceeds the industry average of 2%-which is five times the national average. Foco believes the high engagement is because the tool provides customized cost information. “We continue to enhance the tool to meet members’ demands, and recently added prescription costs,” he says.
Health Care Service Corporation launched its member rewards initiative in January 2017. It has already realized more than $2.6 million in claims expense savings and given more than 3,000 reward checks to members.
“By empowering members to be active consumers of their care, we expect to see lower costs for payers responsible for claims payments because they can more easily compare costs for medical procedures,” Meier says.
Getting members on board
It can be difficult to teach and motivate members or employees to shop for services rather than simply going to the facility that their trusted physician recommends, says Suzannah Gill, JD, benefits strategy consultant, EPIC Insurance Brokers & Consultants, an employee benefits insurance brokerage and consulting firm.
“It goes against the general practice to question a physician’s recommendation, so people need to be trained and motivated to do so,” she says. “Cash-back incentives provide the carrot to encourage people to be smarter healthcare consumers.”
Because cash-back incentives are well received by employees and are completely voluntary, they are an extremely effective solution-they drive lower costs and members perceive them as a plan enhancement, she says.
For these initiatives to be effective, patients and employees need to know that their health insurer offers incentives and then be able to determine which provider to select to secure the incentive.
Health Care Service Corporation members can check with their employer’s human resources group to understand what programs and benefits are available. “We work directly with employers to develop engagement plans and use direct marketing to encourage members to shop for care,” Meier says. “We send monthly emails and postcards to members, and communications to members through their employers.”
Hanson says cash back incentives are a smart strategy, but he says insurers must actively monitor data. “Insurers should look to expand the predictive value of their data by leveraging additional care and outcome data that may be available in the industry to improve the predictive value and better design and monitor the long-term financial and health outcomes that are achieved.”
Karen Appold is a medical writer in Lehigh Valley, Pennsylvania.