“In the first 12 months of the rewards program, we observed a 2.1% relative reduction in prices across all services eligible for the program,” according to, an associate policy researcher at the RAND Corporation, and his colleagues. “This effect was most evident for MRIs, for which there was a 4.7% reduction in prices.”
The rewards program offered $25-$500 for making lower-cost choices among 131 elective services. Rewards value was based on the provider’s price and service, yielding savings of $2.3 million, or roughly $8 per person across the 269,875 employees and dependents eligible for.
Patients who were willing to price-shop chose to save money on imaging tests including ultrasounds, mammograms, and MRIs, Dr. Whaley and his colleagues wrote.
However, initial results showed very little impact in pricing for surgical procedures, including minor (such as breast biopsy), moderate (such as arthroscopy), and major (such as hip and knee replacements), covered by the rewards program.
“There are several potential explanations for this variation across types of services,” the authors wrote. “To receive a reward, patients may need to receive care from a provider different from the one their physician initially recommended. Compared to circumstances where they need an invasive procedure, patients may feel more comfortable asking the provider for a new referral for imaging services.”
An established doctor/patient relationship could have dimmed patient interest in seeking lower cost surgical procedures.
“There is also the complexity of switching their care,” the authors wrote. “For a surgical procedure, switching providers is particularly complex, as it requires identifying a lower-price provider and potentially getting another preoperative visit.”
Quality, while also playing a role in patient choice, is not a factor in the how the rewards program is structured.
“Patients may view imaging services more as commodity services and therefore may be more likely to switch, while patients may be more worried about the quality of lower-price surgeons.”
Building further on that, Dr. Whaley said in an interview that if the program becomes more widely used and successful, it could start to instill more price-shopping for procedures and create levers for pricing wars among local physicians.
“We don’t know if there will be an impact for procedural services in later years,” he said. “On one hand, patients simply may not be willing to price shop for these services. On the other hand, patients may learn about price-shopping for these services or the insurance company might continue to develop the model and try to get patients to shop.”
This, in turn, could potentially affect the dynamic of negotiations between providers and insurance companies for network placement, Dr. Whaley noted.
“It could be a ‘stick’ for insurers to use for negotiations with higher-priced providers. Insurers could say, ‘unless you lower your prices, we’ll pay patients to go to your competitor,’” something he said could ultimately be beneficial to lower-cost providers.
Dr. Whaley also noted that there was a small reduction (0.3 percentage points) in overall health care use among patients using reward-eligible services.
“The intervention population still had to pay their usual out-of-pocket payments, and a patient’s out-of-pocket expense was much higher than the reward amount, on average,” he said. “Therefore, this reduction in utilization may be due to patients’ using the price-shopping tool, becoming more aware of these out-of-pocket liabilities, and deciding to not get care from any provider.”
SOURCE: Whaley C et al. .