Beth Kutscher | April 5, 2016
The term “shared savings” usually brings to mind the CMS’ accountable care programs and the shared rewards for hospitals that save money over the benchmark costs of care.
But a select number of technology companies are bringing the concept of shared rewards directly to consumers, designing programs that give them cash incentives for going to a lower-cost provider or getting routine preventive screenings.
Vitals, a Lyndhurst, N.J.-based company known for its doctor ratings, acquired SmartShopper in 2014 and refashioned the software as a tool for online comparison shopping—with a twist. Consumers sign up for the service through their health plan or employer and receive cash incentives for choosing the most cost-effective care.
The average savings per episode of care was $625 in 2015, according to Vitals. Employers saved $12 million while consumers took home nearly $1.5 million in rewards. Health plans and employers pay out the rewards under the Vitals brand to avoid the appearance that they’re directing care.
Checks to consumers can range from $50 to $500, said Mitch Rothschild, Vitals’ founder and executive chairman. “It’s real; it’s enough to change behavior,” he said. “The idea is, why shouldn’t you as the consumer benefit from you saving money?”
In December Vitals raised $41 million in a Series D financing round led by Goldman Sachs. It expects to offer SmartShopper in as many as 20 states by year-end, up from five at the end of 2015.
It isn’t the only company looking to play in this space. Another one is Chicago-based HealthEngine, which was founded in 2012 by a physician and an economist who say they saw a similar program work well in Europe.
In addition to encouraging patients to shop online, HealthEngine also pays people for getting preventive care that can forestall more expensive conditions down the road. Last month, during National Colon Cancer Awareness Month, it offered up to $500 to people who received colonoscopies.
Employers say the partnerships help them lower their insurance costs.
The state of Kentucky sent out a request for proposals in 2013 in order to select a price transparency vendor and chose Vitals because of the rewards component.
“We had a lot of people that didn’t think about healthcare costs beyond their copay,” said Jenny Goins, the state’s deputy commissioner for employee insurance. “We really needed to increase our health insurance literacy. Once people get a check for getting an MRI or colonoscopy, the biggest selling point is that they will be repeat customers and they will tell their friends.”
The state has seen $10 million in savings since 2013 and offers SmartShopper to all state employees and retirees who are eligible for insurance coverage. It has 174,000 plan holders and 265,000 covered individuals.
Yet it remains to be seen how much control consumers really have over their healthcare dollars, especially when the most expensive episodes of care are typically the unplanned ones.
Using 2011 claims data, the Health Care Cost Institute calculated in a report released last month that only 7% of out-of-pocket costs, or $27.7 billion, was spent on “shoppable” services. Of that amount, 44% was spent on outpatient physician services while knee and hip replacements—the sort of expensive procedures that capture the most attention in discussions about price transparency—only represented 0.3% of out-of-pocket spending.
And while many markets do have significant price variations, others do not, the report said.
Still, the number of people enrolled in high-deductible plans has shot up since 2011, growing about 15% annually over the past five years, according to America’s Health Insurance Plans. And studies have shown consumers can save money if they shop online. What’s less clear, though, is whether they’re getting high-value care or just less expensive care.
SmartShopper does include quality data along with price information for Kentucky health plan members, Goins said. She also asserts that the tool is valuable because it encourages people to take an active role in their health.
“We’re pushing wellness; we’re pushing paying attention,” she said. “We’re encouraging our members to do what they do in most other areas of their lives.”
Source: Modern Healthcare
http://www.modernhealthcare.com/article/20160405/NEWS/160409941