The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.


Reference Pricing: Carrot or Stick?

By Truven Staff
Matt Collins imageAs a recent Associated Press article pointed out that the Obama administration is supporting the continued practice of reference-based pricing, but that decision is being met with mixed reactions. Some say it’s an innovative healthcare cost-control strategy; others worry about the burden on patients.

Either way, it’s really only a matter of time before more employers and health plans begin to strategically implement the concept to reduce costs — because it works. Recent research studies show the use of reference pricing, where plans place a cap on what they will pay for a specific procedure, saves money for both organizations and patients alike.

The key for employers and health plans going forward, though, will be to decide whether to use reference pricing as an incentive or punishment — the proverbial carrot or stick.

Using it as a motivational tool, businesses can leverage the opportunity to inform consumers of reference prices — and then reward them for staying below that price. Rewards could take the form of gift cards for accruing X amount of dollars below the reference price, or even straightforward cash-back rewards equaling the difference between the reference price and the lower dollar amount charged by the provider.

And we already know that encouraging consumers with rewards is a great way to take overall engagement to a whole new level.

Of course, cost penalties that hit their personal pocketbooks can get the attention of consumers, too. Organizations could simply choose to present consumers with reference prices, thus making them accountable for the difference between the actual amount of the procedure over the reference price.

No matter which path an employer or health plan chooses, finding ways to boost cost transparency, like offering treatment cost calculators and other personalized tools, will be important as reference-based pricing gains ground.

Matt Collins
Director, Product Management

Proactive Outreach Can Increase the Success of Price Transparency Solutions

By Truven Staff
Matt Collins imageLast month, Suzanne Delbanco of Health Affairs wrote an excellent blog post pertaining to price transparency solution entitled: “Price Transparency Tools: The Good News, the Challenges, and the Way Forward.” This article does a great job of articulating how far price transparency solutions have come over the years, and more importantly discusses what still needs to be done to ensure that users are adequately engaged to ensure that people a) want to utilize the solution; and b) want to keep coming back. Indeed one of the biggest challenges with offering a price transparency solution is to ensure that people are aware of and want to visit the solution. To paraphrase Ms. Delbanco, just because you build it, doesn’t mean they will come. Having single digit usage rates is not what an employer or health plan offering a price transparency solution is hoping for.
So, this begs the question, how can these solutions entice consumers to want to visit them initially, and become repeat visitors? Plan design plays an integral role in driving solution usage. A consumer with a very rich plan will have very little need to spend the time doing research to find a lower-cost doctor. Consumer-driven health plans give consumers “skin in the game.” For consumers in these plans, a price transparency solution essentially becomes a requirement. When every dollar (prior to meeting a deductible) comes out of the consumer’s pocket, finding a cost-effective doctor almost becomes a necessity.

As Ms. Delbanco points out, once these consumers hit their deductibles, they will be less apt to make return visits. I would argue that having health education content and valuable provider-specific quality metrics within the solution will assist in enticing these consumers to return to the site even after meeting their deductibles. The thought here is that consumers will initially be pulled to the site in search of provider-specific cost information, but then realize the benefits of being able to research the procedures via helpful health education information, and research physicians via robust provider-specific quality information.

At Truven Health Analytics, we are utilizing health messaging to further increase engagement with our price transparency solution. We are able to send proactive monthly messages to a population about gaps in care, preventive screenings, and cost savings and drive them to the transparency solution website. We mine claims data on a monthly basis and look for opportunities to message to a population related to their heath and financial well being. These messages are then sent out via email, SMS text, or the postal service. In the case of the email and SMS messages, users receive a message that states that the user has an important health message waiting in their own personal secure mailbox. This secure mailbox can share the same website as the price transparency solution and the messages themselves can contain messages directing the user to learn more about the costs of the procedure or condition. As a result of marrying an outreach solution with a price transparency solution, we are seeing some very encouraging results in terms of usage, as well as repeat users.

Matt Collins
Director, Product Management