Insurer Opens Door To Health Care Pricing

PITTSBURGH - Shopping for medical care is like shopping for nothing else: the charge is almost never known until the patient gets the bill.

Now, health insurer Highmark Health is cracking a door into the arcane world of health care pricing by trying to guide members to the lowest cost, highest quality providers in its network. The carrot: choosing the best doctors and medical facilities will put cash in the patient's pocket in the form of a rebate.

"Members are increasingly becoming aware of cost variability," Highmark Senior Vice President Lori Schoonmaker said. "We have big plans for this product."

Bigger co-pays and deductibles for health insurance and the sharp rise in the number of high-deductible plans in recent years are forcing consumers to be smarter about where they get an MRI or blood test. The hitch is there's virtually no comparative pricing information available, no Kelley Blue Book for medicine, and charges can vary wildly, even among providers within the same network.

Employer groups, including the Pittsburgh Business Group on Health, have long pressed for pricing transparency in medical care, saying it's critical to holding down costs and improving quality.

In the Highmark Health pilot, Lyndhurst, N.J.-based Vitals SmartShopper will provide the buying guide for the company's self-insured groups, which comprise the bulk of its customers. Here's how it works.

Using claims data, employers identify the highest cost, most common medical services used by a particular group. They can choose from several dozen specific services - imaging, diagnostic testing, elective surgery - to tailor the advice given to employees. Employer groups pay for the service on a per-member, per-month basis or as a percentage of the savings realized.

"When a patient goes to the doctor, they're making decisions that ultimately will cost the payor money," Vitals SmartShopper Founder and Executive Chairman Mitch Rothschild said. "And historically, no one has helped the patient make that decision."

For example, the nationwide charge for an infusion of Remicade - a medicine used to treat rheumatoid arthritis, Crohn's and other diseases - can range between $1,500 at an outpatient clinic and $10,000 at a hospital, Rothschild said.

"Deductibles had been used to make consumers smarter," said Med Health CFO Josephine Oria, who encourages patients to shop around before getting tests done. "But simply avoiding getting care was the unintended consequence."

Variability in charges is "astoundingly wide," he said, with "very little correlation between cost and quality."

Highmark members can see any provider in the insurer's network, but using SmartShopper, Rothschild claims the average savings per employee is over $500 annually for the employer, with member rebates ranging between 10 percent and 20 percent of the employer's savings, up to about $500.

Vitals' recommendations will be based on Highmark's internal quality and cost data, and members can access the advice on the company's website. Highmark is just rolling out the new service, so it's uncertain whether it will get traction.

Vitals was founded in 2005 and, according to its website, helps more than 150 million people annually make health care decisions.

Consumers have long been in the dark about health care's billing system, where charges are unrelated to the amount paid by the insurer and even the actual cost of providing the service. Worse, health care costs have been rising.

Premiums for family coverage were up 58 percent between 2006 and 2016, according to the Kaiser Family Foundation, a Menlo Park, Calif.-based health policy research outfit, while the percentage of insured workers with an annual deductible of $1,000 or more for single coverage was 45 percent in 2016 - up from 6 percent during the same decade.

Increased premiums and copays have also spawned such companies as Greensburg, Pa.-based Pratter LLC, which uses patient invoices to compile a proprietary price list for medical procedures performed at institutions nationwide.