Stop, Switch, and Save?

As the cost of health care in America rises, many employers have turned to high-deductible health plans (HDHPs) in order to cut spending. Enrollees are incentivized by greater cost sharing to shop for inexpensive providers. In most marketplaces, Americans are accustomed to shopping for low prices. However, health care remains a paradoxical industry where massive consumer spending is only modestly influenced by competitive pricing. 

One recent study explores the degree to which HDHP enrollment encourages patient switching to low-cost providers (i.e. price shopping). The study found no evidence of price shopping for primary care office visits. However, enrollees did save an average of 12.8% on laboratory tests by price shopping. When enrollees switch from traditional, low-deductible plans to HDHPs, much of their savings was attributable to reduced healthcare utilization rather than price shopping. 

Healthcare services discourage price shopping in a number of ways. Prices are opaque and patients are often unable to get price quotes directly from their physician. Patients may also have limited access to providers, either by their insurance company’s narrow network or by physician shortages. Most importantly, many patients are reluctant to interrupt their continuity of care by switching providers.

Transparency is an important target to improve the patient experience of price shopping. Currently, the prices of many services such as lab tests and imaging are negotiated privately between health plans and providers. Shifting towards a retail model of commodity services and removing their coverage from health plans would eliminate price negotiations and improve transparency for a large fraction of healthcare expenses. 

Online price tools might improve transparency. However, their utilization and efficacy are lacking. There is great potential for services that can integrate cost and quality data in an easy-to-use interface. Lastly, educating physicians about the costs of care may reduce utilization. This may save patients money in situations where projected costs cannot be easily estimated.

Raising deductibles does not necessarily encourage price shopping. In fact, it may lead patients to forgo treatment altogether. Nevertheless, price transparency is an important avenue towards improving the healthcare shopping experience and empowering patients to make informed decisions.

This Policy Prescriptions® review is written by Matthew Meyer as part of our collaboration with the Health Policy Journal Club at Baylor College of Medicine where she is a medical student.

Abstract

OBJECTIVE: To investigate whether enrollment in high-deductible health plans (HDHPs) led enrollees to choose lower-priced providers for office visits and laboratory tests.

STUDY SETTING: Claims data from more than 40 large employers.

STUDY DESIGN: We compared the change in price for office visits and laboratory tests for enrollees who switched to HDHPs versus enrollees who remained in traditional plans. We estimated separate models for enrollees who changed providers versus those who remained with the same provider to disentangle the effects of HDHPs on provider choice and negotiated prices.

DATA COLLECTION: Claims data from 2004 to 2010 on 1.8 million enrollees.

PRINCIPLE FINDINGS: After enrollment in HDHPs, 28 percent of enrollees changed physicians for office visits (compared to 19 percent in the Traditional Plan group, p < .01); however, this did not result in a statistically significant reduction in price for office visits. About 25 percent of enrollees changed providers for laboratory tests (compared to 23 percent in the Traditional Plan group, p < .01), resulting in savings of about $2.09 or a 12.8 percent reduction in price per laboratory test. We found that HDHPs had lower negotiated prices for office visits but not for laboratory tests.

CONCLUSIONS: High-deductible health plan enrollment may shift enrollees to lower cost providers, resulting in modest savings.

PMID: 29058316

Zhang, X, et al. Health Services Research. Oct 23 2017; epub

*This article has been corrected to attribute the correct authorship