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

Employers Can Learn a Valuable Lesson From Exchanges

By Truven Staff
Matt Collins imageThe opening of the health insurance exchanges this fall has certainly put a spotlight on a few of the things that can go awry during insurance enrollment. But there are some important lessons that can be learned from it – lessons that can help employers as they begin to plan for next year’s open enrollment.

For instance, the exchanges attempted to guide consumers through the process by presenting premiums and designs of all the available plans, so quick cost comparisons could be made. That’s a good start for helping consumers choose the right plan, and a best practice already in place for most employers.

But it didn’t go far enough.

To be successful, the process is missing a key element: A truly personalized experience that would help a user get a handle on his or her specific situation – especially varying annual out-of-pocket costs, in addition to the plan premiums.

Employers have the capacity to help employees better understand those costs by providing actual claims data history during the decision-making process. That data history can paint an accurate picture of past out-of-pocket expenses. In addition, employers can ask a few questions about planned procedures and other anticipated costs for the coming year, and incorporate that information into the decision process.

Without this level of tailored, data-driven experience, your employees may simply choose a plan with the smallest premium, which doesn’t always pan out as the best option given other circumstances. Providing this type of detailed data can also help employees plan better pre-tax healthcare savings account contributions, too, and minimize surprises.

Of course, doing everything you can to help employees select their best-fit plan has benefits for your organization, as well. Employers using Truven Health Analytics personalized enrollment tools have seen results like a 60 percent decline in the number of over-insured employees and a 20 percent increase in consumer-driven health plan enrollment.

For more ideas on how to make next year’s open enrollment successful for both your employees and organization – despite growing complexities and costs – check out our complimentary insights brief, Six Best Practices for Open Enrollment.

Matt Collins
Director, Product Management

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