Healthcare transparency offers new savings opportunity for self funded plans

Jim Freedman

Feb 9, 2010

Healthcare transparency offers new savings opportunity for self funded plans

The continuous rise in healthcare costs is causing employers to make major changes to their health plans.  Most notably, they are requiring their employees to accept more personal responsibility for the cost of their healthcare.  While sharing more of these costs with employees does ease the employer’s burden, it does little to address the real issue –  rising healthcare costs.

It’s no secret that health plans pay providers different rates for the same procedures.  A quick review of a plan’s paid claims will reveal just how significant these price discrepancies can be and the substantial impact they have on claims costs.  Yet “prices” have always been kept a mystery to members, preventing them from giving any real financial consideration to their medical care.  Why shouldn’t members have the ability to determine if going to a provider that is more costly offers them any more quality or any better experience?

The term “transparency” is increasingly gaining momentum in the health industry and is now being included in federal and state healthcare legislation.  Today, many large carriers are progressively using their websites to make pricing transparency available to their members, but consumers are also doing their own research, utilizing Internet search engines to make healthcare cost inquires.  This is causing a surge in the number of social sites offering information oriented toward the healthcare consumer.  Like most Internet models you can obtain an assortment of information, read the subjective experiences of others, and post whatever material or opinion you want to provide.  The rapid growth and interest in these initiatives indicates that the time for true healthcare transparency is now.

While transparency information assists the member in making informed and value-based decisions, it also creates a new savings opportunity for employers with self funded plans.  By making true transparency information available to their members, employers can effectively engage their employees in the management  and even the reduction of the plan’s medical claims costs.  The results are real, hard dollar savings that are both measureable and significant.  Empowering employees to make cost effective decisions also allows them to obtain more healthcare services from their deductible and out-of-pocket responsibilities.  And as employees continue to shop, the savings realized in the reduction of claims costs can become a key offensive for protecting the member’s benefit level.

In today’s economy, employees are feeling uncertain about any number of things. Certainly the healthcare coverage for their families is a top concern and they want to protect it.  When given concise, actionable information, consumers are very capable of making informed value-based healthcare decisions.  For the best results, members need transparency tools that are easy-to-use with quick access to information that is specific to their plan.  The information needs to be up-to-date, accurate and easy to understand.  This allows employees to plan for and obtain the healthcare they need at a cost they know and understand before having the medical procedure.

Even though employees are new to their role as healthcare consumers, most have considerable expertise in consumerism.  And, like all other consumer decisions, it is the “price” that plan members want to know and must have.  Healthcare consumers regard posting a provider’s “charges” as meaningless, as they are aware that virtually no one pays at that level.  Retail businesses have known for decades that causing mistrust with consumers regarding money is a costly proposition, especially when they have options.  And just like in the retail world, when consumers spending their own money are presented with choices and prices, costs go down.

While many consumers assume healthcare providers are competent and provide high-quality healthcare, some may be interested in comparing providers based on nationally recognized quality indicators.  Consumers also value and want to know the experience others have had with providers.  A quick glance online demonstrates that people today are quite willing to share most of life’s experiences for the benefit of anyone interested.

Healthcare costs have skyrocketed over the last decade and there is no clear end in sight.  Employers need to engage their employees to help them manage the cost of their medical claims.  The awareness that health plans pay providers significantly different amounts for the exact same procedure is disconcerting to plan members.  But without information, employees have no choice but to incur expensive healthcare totally in the dark.  Employees are concerned about their healthcare coverage and its costs.  Transparency allows members to evaluate their options and make a value-based decision while reducing the plans medical claims cost.  The transparency tools experiencing the highest adoption are trustworthy, easy-to-use and offer information specific to the member’s plan.  With true transparency, the path to lowering healthcare costs becomes clear.

Jim Freedman is the CEO and Co-Founder of IF Technologies who market their transparency solution, HealtheReports, to insurers, networks, and self insured employers.  For more information about HealtheReports, contact Jim at jim@ThinkIFT.com or visit www.ThinkIFT.com.