Responding to Growing Demand for Transparency

Experts agree that a lack of true price transparency has contributed significantly to the inefficiency in healthcare. Several websites compare the costs for certain procedures at varying hospitals, but it’s still very difficult, if not impossible, to make an informed choice when preparing for a non-emergency procedure. As a result, most people still go to doctors participating in a covered network and follow physician referrals when a specialist is required. In most cases, these choices are made without any knowledge of the cost.

Powerful Mobile Technology

Today, leading TPAs are providing self-funded health plan members with a variety of very powerful mobile transparency tools. One new mobile app enables members to identify fair pricing for more than 200 common procedures, including surgeries, imaging and diagnostic testing. By linking a rewards program, the app awards financial incentives when high quality, competitively priced providers are selected over those with lesser ratings.

Another software maker that describes a third of healthcare procedures as “shoppable”, has introduced a mobile app that enables plan members to search for physicians by procedure, location and price. This tool even goes beyond facts and figures to provide detailed descriptions of the procedure being searched. When members need further assistance, care navigators are available to provide online support via a live chat option.

Expert Administration Still Matters

While a totally open pricing system may never be possible in a business as complex as healthcare, TPAs are making self-funded health plans more transparent all the time. Strategies such as Reference Based Pricing and Concierge Health Advocacy are having a tremendous impact on cost and employee engagement. And while insurance carriers typically withhold claims data from fully insured groups, TPAs are experts at helping their clients put valuable claims data to work to identify cost drivers and manage chronic conditions in ways that help the plan avoid catastrophic claims in the future.

As the transition from volume to value-based healthcare continues, more responsibility will land in the hands of plan members. Smart employers know that a well-designed health plan can foster positive change and lower costs only if members understand their benefits. As long as self-funded plans, highly personal service and creative ideas are allowed to flourish, the number of engaged consumers capable of making economically wise healthcare decisions will continue to grow.

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Montana Adopts Reference Based Pricing Strategies

Article as seen on July 15th, 2016 in blog.riskmanagers.us.

Montana adopts reference based pricing model for state employees. Will other states follow?

Montana says health plan contracts will save $25 million

From Tribune reports 3:27 p.m. MDT July 8, 2016

Montana will save more than $25 million by the end of 2018 through changes to the state of Montana’s health care plan, Gov. Steve Bullock said.

“This change will save taxpayers and employees money, which means more money in the hands of hardworking Montanans being spent on Main Streets all across the state,” Bullock said. “As the largest state employer, it is critical that the state of Montana leads the way in managing rising health care costs and do so in a fiscally responsible way.”

The state of Montana is implementing transparent pricing, a new way of paying state medical costs, based on paying a multiple above what Medicare pays for health care services.

GREAT FALLS TRIBUNE

Benefis and Montana insurance plan contract talks fail

“Until we manage health care costs, they will continue to eat away at employee salaries and family budgets,” said Sheila Hogan, director of the Department of Administration. “This change will put money into the pockets of our employees for everyday needs.”

Contract talks with Benefis Health System in Great Falls failed and Benefis is the only one of the top 10 health care providers in Montana that is not participating in the state health plan program.

Under the former model of payment, hospitals and facilities could charge the state’s health plan dramatically different amounts for the same service. For example, a hospital in Montana could charge $25,000 for equivalent knee replacement surgery, while another charged more than $100,000. The new form of reimbursing hospitals changes that model. Allegiance is contracting with facilities for more comparable costs by anchoring pricing to a national point of reference, Medicare, then paying hospitals a multiple above that. This will make medical costs more predictable, consistent and comparable among facilities.

“This change in reimbursement method is game-changing for the state of Montana,” said Ron Dewsnup, president and general manager of Allegiance.

Transparent pricing is one of the upcoming efforts by the state’s Health Care and Benefits Division to manage health care costs. An additional resource, Healthcare Bluebook, will be available through Allegiance later this summer, which allows members to compare medical price ranges and quality.

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Interest in Reference-Based Pricing Grows

Reference-based pricing (RFB) strategies are increasing in popularity as employers seek more affordable options for their health benefit plans. Although PPO networks and their negotiated discount agreements have been in place for decades, they provide very little transparency to the true costs of services provided.

How can an employer control health care costs when the base charges for services for the same procedures can vary dramatically between physicians and hospitals in the same region? For example, depending upon which hospitals is providing the service, hip surgery can cost anywhere from $20,000 to $100,000 (all incorporating PPO discounts).

Reference-based pricing is a strategy that drives plan enrollees to find and use a provider (usually a hospital) that has agreed to accept a fixed amount for certain procedures. These amounts can be directly negotiated with providers using the average fees charged within the same geographic region by providers of similar training and experience or, more often, calculated as a percentage over and above current Medicare reimbursement rates.

The U.S. Department of Health and Human Services (HHS) is comfortable with this new approach, as it provides much greater transparency to the true cost of services – with the caveat that care must be taken to ensure plan participants are provided with “adequate access to quality providers” and are not just forced to choose the least costly alternative.

A Perfect Complement to Self-Funding

Self-funded plans are particularly well-suited to this approach and many TPAs are already offering their clients alternatives that incorporate some form of reference-based pricing. With experienced plan administrators guiding the implementation and administration, self-funded employer groups can finally know the true cost of care – something that few fully-insured organizations have ever been able to identify.

Although there is a concern that plan participants may be “balance billed” – charged the different between the provider’s retail or network pricing and what they are being paid under the RBP agreement – some TPAs take steps to ensure plan members are protected against this.

Far outweighing these considerations is the potential for savings. It is not uncommon for reference-based pricing to yield savings in the range of $150,000 for every 100 covered employees. To learn more about reference-based pricing alternatives, contact Diversified Group today.

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