Transparency Helps Patients Shop for Care

Published April 1, 2006

Patients often complain they have difficulty obtaining information on the price and quality of services offered to them by health care providers. Policies and procedures adopted by the industry are the main reason.

Many health plans, for example, consider information about negotiated discounts to be proprietary and therefore prevent providers from revealing contractual prices. Providers, too, often want to keep their negotiated prices–and other important numbers, such as quality-of-care scores–a secret.

Some insurers and other firms, however, are trying to remove the veil of secrecy that often surrounds health care. By making information more readily available, these firms are helping patients become better health care consumers.

Enabling Price Comparisons

Last year, insurer Aetna announced the first program of its kind to disclose on the Internet the price it pays for common physicians’ services in the Cincinnati area. Dallas-based insurer UICI encourages its enrollees to consider the cost of health care services by combining financial incentives with Web-based decision support tools enabling patients to compare price and quality. According to Peter Gaillard, vice president of product development for UICI’s Administrative Services Group, “only by providing members with meaningful information about the cost and quality of care and the tools to use that information can a plan truly be considered consumer driven.”

Unlike most other consumer-driven health plans that rely on traditional provider networks, UICI’s HealthMarket plan is loosely based on the casualty insurance model. The plan is able to offer greater choice of providers because physicians in its network are free to charge different prices. The HealthMarket Web site features the maximum allowable cost (MAC) for thousands of common physician services, along with a comprehensive list of participating physicians and hospitals. Choosing a provider whose contractual rate is higher than the MAC results in a higher out-of-pocket payment. To avoid paying more, patients are encouraged to use the HealthMarket Web site to look up provider fee information.

A common trait of consumer-driven health plans is that enrollees have a financial incentive to control spending up to the point when they’ve met their deductible. HealthMarket enrollees who’ve met their deductible still must compare prices to avoid incurring higher out-of-pocket payments.

Creating Info Partnerships

Insurers often partner with third parties to increase the amount of information consumers have available.

For instance, Subimo contracts with health plans such as UICI’s HealthMarket and WellPoint’s Lumenos to provide Web-based information on medical quality. Because the metrics of health care quality are still being fine-tuned (and often are confusing for the layperson), quality indicators are usually condensed into a more consumer-friendly format. A common method is to compare quality outcomes that should be expected in relation to a quality benchmark (e.g., better or worse) for comparable facilities. Subimo also reports the approximate number of procedures performed in each facility per year compared to benchmark quantities necessary for providers to keep skills sharp.

Insurers looking for ways to improve patient participation find financial incentives are a big motivator. Lumenos reports many of its corporate employer plans deposit additional funds into workers’ health reimbursement arrangements (HRAs) in return for them taking an online health risk assessment. Those workers found to be at risk for health problems are offered a chance to earn additional HRA deposits by participating in a Web-based program that teaches them how to manage their health better. Workers who complete the program successfully often receive a third HRA deposit.

Eric Fennel, vice president of information technology for Lumenos, notes, “These plans are designed so that consumers have the resources to become more engaged in their health and make the best use of their health dollars. Through these plans, consumers have, in a way, become auditors of both their health care quality and health care costs.”

Promoting Best Practices

Research has shown that physician practices are not always consistent with the latest evidence-based medical knowledge, but few patients are in a position to know whether they are receiving the preferred treatment. MedEncentive, an Oklahoma-based firm that works with health plans, uses financial incentives to promote greater use of evidence-based “best practice” guidelines.

These financial incentives are extended to both doctors and patients on a per-occurrence-of-care basis through the use of Web-based tools. Once a physician logs on, a patient treatment screen suggests a best practice guideline for the diagnosed condition. Physicians who agree to follow the best practices (or provide a good reason for deviating) and prescribe what is called information therapy (Ix) to their patients receive a higher reimbursement. Once patients receive their Ix prescriptions, they must log onto a similar Web site to receive instructions explained in lay terms on the best evidence-based treatment. Patients who agree to follow the protocols earn rebates that lower their out-of-pocket costs.

In health plans that incorporate this tool, neither doctor nor patient has an excuse for not knowing the most appropriate treatment plan. The ultimate goal is to save money by promoting high-quality medicine and healthy behavior.

MedEncentive recently completed a year-long trial with several employers. According to founder Jeff Greene, “all three employers experienced substantial health care cost reductions. Equally important is the fact that physicians and patients have given the program high marks.”

Greene says a study based on their findings will be published soon, adding, “It is expected to generate a good bit of interest.” Green says, “Though our results are preliminary, we know of no other program in the country that has received widespread and enthusiastic physician acceptance and patient involvement while achieving cost containment. We are very encouraged.”

Providing Drug Info

Patients’ access to information on prescription drugs also has improved over the past few years. The Web site, founded by a cardiologist, allows patients to compare the range of therapeutic drug substitutes available to treat their conditions. According to Tobias Rogers, CEO of Rxaminer, “the era for tools which help people find lower-cost medication has finally arrived.”

To use the service, a patient logs onto the Rxaminer Web site and enters the specific medication, strength, and doses scheduled each day. produces a report of comparable drug alternatives with the respective cost savings. The report explains the patient’s options and can be used to facilitate a discussion with his or her physician.

An affiliated Web site,, displays the best price for drugs at a number of highly competitive online pharmacies. Its technology is currently being used to help seniors research the price of their drugs through the new Medicare Part D drug benefit.

Rogers claims the number of health plans interested in Rxaminer’s decision support tools has increased dramatically. He said, “In the last six months we’ve had amazing growth and interest in our tools from consumer-driven health plans, the new Medicare Part D plans, and prescription drug plans that feature cost-sharing.” recently partnered with Medco Health Solutions, a large pharmacy benefit management company that works with numerous health plans. In March 2006, Medco launched a pharmacy decision support tool for health plans, which advertises “Rxaminer inside.”

Devon M. Herrick, Ph.D. ([email protected]) is a health economist and senior fellow at the National Center for Policy Analysis.