Pay-to-shop health care incentives gaining traction

Laurie Cook went shopping recently for a mammogram near her home in New Hampshire. Using an online tool provided through her insurer, she plugged in her ZIP code. Up popped facilities in her network, each with an incentive amount she would be paid if she chose it.

Paid? To get a test? It’s part of a strategy to rein in health care spending by steering patients to the most cost-effective providers for non-emergency care.

State public employee insurance programs were among the early adopters of this approach. It is now finding a foothold among policymakers and in the private sector.

Scrolling through her options, Cook, a school nurse who is covered through New Hampshire’s state employee health plan, found that choosing a certain facility scored her a $50 check in the mail.

She then used the website again to shop for a series of lab tests. “For a while there, I was getting a $25 check every few weeks,” said Cook. The checks represented a share of the cost savings that resulted from her selections.

Lawmakers in nearby Maine took the idea further, recently enacting legislation that requires some private insurers to offer pay-to-shop incentives, part of a movement backed by a conservative foundation to get similar measures passed nationally.

Similar proposals are pending in a handful of other statehouses, including Virginia, West Virginia and Ohio.

“If insurance plans were serious about saving money, they would have been doing this stuff years ago,” said Josh Archambault, a senior fellow at the Foundation for Government Accountability, a limited-government advocacy group based in Naples, Fla., that promotes such “right-to-shop” laws. “This starts to peel back the black box in health care and make the conversation about value.”

Still, some economists caution that shop-around initiatives alone cannot force the level of market-based change needed. While such shopping may make a difference for individual employers, they note it represents a tiny drop of the $3.3 trillion spent on health care in the U.S. each year.

“These are not crazy ideas,” said David Asch, professor of medicine, medical ethics and health policy at the Penn Medicine Center for Health Care Innovation in Philadelphia. But it’s hard to get consumers to change behavior — and curbing health care spending is an even bigger task. Shopping incentives, he warned, “might be less effective than you think.”

If they achieve nothing else, though, such efforts could help remove barriers to price transparency, said Francois de Brantes, vice president and director of the Center for Value in Health Care at Altarum, a nonprofit that studies the health economy.

“I think this could be quite the breakthrough,” he said.

Yet de Brantes predicts only modest savings if shopping simply results in narrowing the price variation between high- and low-cost providers: “Ideally, transparency is about stopping folks from continuously charging more.”

Among the programs in use, only a few show consumers the price differences among facilities. Many, like the one Cook used, merely display the financial incentives attached to each facility based on the underlying price.

 

Advocates say both approaches can work.

“When your plan members have ‘skin in the game,’ they have an incentive to consider the overall cost to the plan,” said Catherine Keane, deputy commissioner of administrative services in New Hampshire. She credits the incentives with leading to millions of dollars in savings each year.

Several states require insurers or medical providers to provide cost estimates upon patients’ requests, although studies have found that information can still be hard to access.

Now, private firms are marketing ways to make this information more available by incorporating it into incentive programs.

For example, Vitals, the New Hampshire-based company that runs the program Cook uses, and Healthcare Bluebook in Nashville offer employers — for a fee — comparative shopping gizmos that harness medical cost information from claims data. This information becomes the basis by which consumers shop around.

Crossing Network Lines

Maine’s law, adopted last year, requires insurers that sell coverage to small businesses to offer financial incentives — such as gift cards, discounts on deductibles or direct payments — to encourage patients, starting in 2019, to shop around.

A second and possibly more controversial provision also kicks in next year, requiring insurers, except HMOs, to allow patients to go out-of-network for care if they can find comparable services for less than the average price insurers pay in network.

Similar provisions are included in a West Virginia bill now under debate.

Touted by proponents as a way to promote health care choice, it nonetheless raises questions about how the out-of-network price would be calculated, what information would be publicly disclosed about how much insurers actually pay different hospitals, doctors or clinics for care and whether patients can find charges lower than in-network negotiated rates.

“Mathematically, that just doesn’t work” because out-of-network charges are likely to be far higher than negotiated in-network rates, said Joe Letnaunchyn, president and CEO of the West Virginia Hospital Association.

Not necessarily, counters the bill’s sponsor, Del. Eric Householder, who said he introduced the measure after speaking with the Foundation for Government Accountability. The Republican from the Martinsburg area said “the biggest thing lacking right now is health care choice because we’re limited to our in-network providers.”

Shopping for health care faces other challenges. For one thing, much of medical care is not “shoppable,” meaning it falls in the category of emergency services. But things such as blood tests, imaging exams, cancer screening tests and some drugs that are administered in doctor’s offices are fair game.

Less than half of the more than $500 billion spent on health care by people with job-based insurance falls into this category, according to a 2016 study by the Health Care Cost Institute, a nonprofit organization that analyzes payment data from four large national insurers. The report also noted there must be variation in price between providers in a region for these programs to make sense.

Increasingly, though, evidence is mounting that large price differences for medical care exist — even among rates negotiated by the same insurer.

“The price differences are so substantial it’s actually scary,” said Heyward Donigan, CEO of Vitals.

At the request of Kaiser Health News, Healthcare Bluebook ran some sample numbers for a Northern Virginia ZIP code, finding the cost of a colonoscopy ranged from $670 to $6,240, while a knee arthroscopy ranged from $1,959 to $20,241.

Another challenge is the belief by some consumers that higher prices mean higher quality, which studies don’t bear out.

Even with incentives, the programs face what may be their biggest challenge: simply getting people to use a shopping tool.

Kentucky state spokeswoman Jenny Goins said only 52 percent of eligible employees looked at the shopping site last year — and, of those, slightly more than half chose a less expensive option.

“That’s not as high as we would like,” she said.

Still, state workers in Kentucky have pocketed more than $1.6 million in incentives — and the state said it has saved $11 million — since the program began in mid-2013.

Deductibles, the annual amounts consumers must pay before their insurance kicks in and are usually $1,000 or more, are more effective than smaller shopping incentives, say some policy experts.

In New Hampshire, it took a combination of the two.

The state rolled out the payments for shopping around — and a website to look for best prices — in 2010. But participation didn’t really start to take off until 2014, when state employees began facing an annual deductible, said Deputy Commissioner Keane.

Still, the biggest question is whether these programs ultimately cause providers to lower prices.

Anecdotally, administrators think so.

Kentucky officials report they already are witnessing a market response because providers want patients to have an incentive to choose them.

“We do know providers are calling and asking, ‘How do I get my name on that list’ [of cost-effective providers]?” said Kentucky spokeswoman Goins. “The only way they can do that is to negotiate.”

Read the article.

Source:
Appleby J., Kaiser Health News (5 March 2018). "Pay-to-shop health care incentives gaining traction" [Web blog Post]. Retrieved from address https://www.benefitspro.com/2018/03/05/pay-to-shop-health-care-incentives-gaining-tractio/


Financial shocks could disrupt tomorrow’s retirees

While today’s retirees, dependent as they are on Social Security and traditional pensions rather than 401(k)s, are better able to withstand financial shocks, tomorrow’s retirees won’t have it so easy.

They will be more in danger of being forced to downsize or spend down their assets to meet unexpected expenses such as a spike in medical bills or a loss of income through being widowed.

So says a brief from the Center for Retirement Research at Boston College, which investigated the financial fragility of the elderly to see how well they might be able to deal with financial shocks.

The reason the elderly are seen as financially fragile, the brief says, stems from the fact that, “once retired, they have little ability to increase their income compared to working households.”

And with future retirees becoming ever more dependent on their own retirement savings, and receiving less of their retirement income from Social Security and defined benefit plans, those financial shocks will get harder and harder to deal with.

To see how that will play out, the study looked at the share of expenditures a typical elderly household devotes to basic needs. Next, it looked at how well today’s elderly can absorb those aforementioned major financial shocks. And finally, it examined the increased dependence of tomorrow’s elderly on financial assets, whether those assets are sufficient, and how well those assets do at absorbing shocks.

Nearly 80 percent of the spending of a typical elderly household, the report finds, is used to secure five “basic” needs: housing, health care, food, clothing, and transportation. In lower-income households or the homes of single individuals and in households that rent or have a mortgage, those basic needs make up even more of a household’s spending.

And while there are areas in which a household can cut back—such as entertainment, gifts or perhaps cable TV—as well as potential cutbacks on basic needs, typical retirees can’t cut by more than 20 percent “without experiencing hardship.” And among those lower-income and single households, as well as those with rent or mortgages to pay, the margin is even slimmer.

The need for medical care is so important to those who need it, says the report, that the question becomes whether medical expenditures crowd out spending on other basic items.

And while a widow is estimated by federal poverty thresholds to need 79 percent of the couple’s income to maintain her standard of living, other studies indicate that widows get substantially less than that from Social Security and a pension—estimates, depending on the study, range from 62 percent to 55 percent. And that likely does not leave a widow enough to meet basic expenses.

Among current retirees, only 10 percent report having to cut back on necessary food or medications because of lack of money over the past 2 years.

However, retirees tomorrow, if they have failed to save enough to see them through retirement, are likely to experience income declines of from 6 to 21 percent for GenXers—and that’s assuming that GenXers “annuitize most of their savings at an actuarially fair rate…” despite the fact that very few actually annuitize, and cannot get actuarially fair rates even if they do.

And since the brief also finds that the greater dependency of tomorrow’s retirees on whatever they’ve managed to save in 401(k)s means that they’re exposed to new sources of risk—“that households accumulate too little and draw out too little to cushion shocks and that their finances are increasingly exposed to market downturns”—that means that future retirees will be subjected to a reduced cushion between income and fixed expenses.

To compensate, they will need to downsize and cut their fixed expenses. Neither one bodes well for a comfortable retirement.

Read the article.

Source:
Satter M. (1 March 2018). "Financial shocks could disrupt tomorrow’s retirees" [Web Blog Post]. Retrieved from address https://www.benefitspro.com/2018/03/01/financial-shocks-could-disrupt-tomorrows-retirees/


Ahead of the Midterms, Voters across Parties See Costs as their Top Health Care Concern

From Kaiser Health News is this poll deciphering where the public sits ahead of Midterms. What is there top healthcare concern? Costs. Get all the information in this article.


At a time when the Trump Administration is encouraging state efforts to revamp their Medicaid programs through waivers, the latest Kaiser Family Foundation tracking poll finds the public splits on whether the reason behind proposals to impose work requirements on some low-income Medicaid beneficiaries is to lift people out of poverty or to reduce spending.

The Centers for Medicare and Medicaid Services in January provided new guidance to states and has since approved such waivers in two states (Kentucky and Indiana). Eight other states have pending requests

When asked the goal of work requirements, four in 10 (41%)  say it is to reduce government spending by limiting the people enrolled in the program, while a third (33%) say it is to lift people out of poverty as proponents say.

While larger shares of Democrats and independents say the reason is to cut costs, Republicans are more divided, with roughly equal shares saying it is to lift people out of poverty (42%) as to reduce government spending (40%). People living in the 10 states that have approved or pending work requirement waivers are similarly divided, with near-equal shares saying the goal is to lift people out of poverty (37%) as to reduce government spending (36%). This holds true even when controlling for other demographic variables including party identification and income.

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In addition to work requirements, five states are currently seeking Medicaid waivers to impose lifetime limits on the benefits that non-disabled adults could receive under the Medicaid program. The poll finds the public skeptical of such a shift, with two thirds (66%) saying Medicaid should be available to low-income people as long as they qualify, twice the share (33%) as say it should only provide temporary help for a limited time.

Substantial majorities of Democrats (84%) and independents (64%) say Medicaid should be available without lifetime limits, while Republicans are divided with similar shares favoring time limits (51%) and opposing them (47%).

These views may reflect people’s personal experiences with Medicaid and the generally positive views the public has toward the current program, which provides health coverage and long-term care to tens of millions of low-income adults and children nationally.

Seven in 10 Americans report a personal connection to Medicaid at some point in their lives – either directly through their own health insurance coverage (32%) or their child being covered (9%), or indirectly through a friend or other family member (29%).

Three in four (74%) hold favorable views of Medicaid, including significant majorities of Democrats (83%), independents (74%) and Republicans (65%). About half (52%) of the public say the current Medicaid program is working well for low-income enrollees, while about a third (32%) say it is not working well.

Most Residents of Non-Expansion States Favor Medicaid Expansion to Cover More Low-Income People

Under the Affordable Care Act, most states expanded their Medicaid programs to cover more low-income adults. In the 18 states that have not done so, a majority (56%) say that their state should expand Medicaid to cover more low-income adults, while nearly four in 10 (37%) say their state should keep Medicaid as it is today.

Slightly more than half of Republicans living in the 18 non-expansion states (all of which have either Republican governors, Republican-controlled legislatures or both) say their state should keep Medicaid as it is today (54%) while four in 10 (39%) say their state should expand their Medicaid program.

Favorable Views of the ACA Reach New High in More Than 80 KFF Polls

The poll finds 54 percent of the public now holds a favorable view of the Affordable Care Act, the highest share recorded in more than 80 KFF polls since the law’s enactment in 2010. This reflects a slight increase in favorable views since January (50%), while unfavorable views held steady at 42 percent.

The shift toward more positive views comes primarily from independents (55% view the ACA favorably this month, up slightly from 48% in January).

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Public Remains Confused about Repeal of the ACA’s Individual Mandate

The poll also probes the public’s awareness about the repeal of the ACA’s requirement that nearly all Americans have health insurance or pay a fine, commonly known as the individual mandate. The tax legislation enacted in December 2017 eliminated this requirement beginning in 2019.

About four in 10 people (41%) are aware that Congress repealed the individual mandate, a slight increase from January, when 36 percent were aware of the provision’s repeal.

However, misunderstandings persist. Most (61%) of the public is either unaware that the requirement has been repealed (40%) or is aware of its repeal but mistakenly believes the requirement will not be in effect during 2018 (21%). Few (13%) are both aware that it has been repealed and that it remains in effect for this year.

Costs are Voters’ Top Health Care Concern ahead of the 2018 Midterm Elections

Looking ahead to this year’s midterm elections, the poll finds Democratic, Republican and independent voters most often cite costs as the health care issue that they most want candidates to address.

When asked to say in their own words what health care issue that they most want candidates to discuss, more than twice as many voters mention health care costs (22%) as any other issue, including repealing or opposing the Affordable Care Act (7%).  Costs are the clear top issue for Democrats (16%) and independents (25%), and one of the top issues for Republicans (22%) followed by repealing or opposing the ACA (17%).

Designed and analyzed by public opinion researchers at the Kaiser Family Foundation, the poll was conducted from February 15-20, 2018 among a nationally representative random digit dial telephone sample of 1,193 adults. Interviews were conducted in English and Spanish by landline (422) and cell phone (771). The margin of sampling error is plus or minus 3 percentage points for the full sample. For results based on subgroups, the margin of sampling error may be higher.

Read the article.

Source:
 Kaiser Family Foundation (1 March 2018). "Poll: Public Mixed on Whether Medicaid Work Requirements Are More to Cut Spending or to Lift People Up; Most Do Not Support Lifetime Limits on Benefits" [Web Poll Post]. Retrieved from address https://www.kff.org/medicaid/press-release/poll-public-mixed-medicaid-work-requirements-more-to-cut-spending-lift-people-up-most-do-not-support-lifetime-limits/

Health prices to outpace inflation for first time since 2010

Since 2010, our health prices have stayed in pace or below inflation. For the first time since then, they're expected be much, much more. Get the details in this article from Employee Benefit Advisor.


The growth in U.S. healthcare prices is projected to outpace economy-wide inflation for the first time since 2010, the second report in a week to signal the end of a long stretch of restrained medical increases.

This year, price increases for personal health expenditures are projected to rise 2.2%, compared with 1.9% for overall inflation, according to a report released Wednesday by the Centers for Medicare and Medicaid Services. The findings confirmed a recent analysis warning that the U.S. could be at the cusp of a return to higher medical inflation.

Health spending is determined by the price of goods and services, as well as how much health care people use. In recent years, increases in health spending have been driven by volume, as millions more people gained insurance coverage under the Affordable Care Act. While high-cost drugs have made headlines, overall price hikes have been historically low, increasing by an average of 1.1% annually between 2014 and 2016.

Those trends are projected to reverse. Government actuaries expect the number of people without health insurance to increase slightly after Republicans lifted the ACA’s penalty for going uninsured late last year. Medical price growth, meanwhile, will rebound, “in part reflecting more rapid growth in healthcare workers’ wages,” the report said.

 
Bloomberg

Healthcare inflation has been partly restrained by limits on how much Medicare pays hospitals and physicians under the ACA and other legislation, combined with overall slow growth in prices throughout the economy.

In recent days, concerns about higher-than-expected inflation have rattled stock markets and pushed up Treasury yields. Investors feared that a tightening labor market and rising wages could push up prices and spur the Federal Reserve to raise interest rates faster than anticipated to keep the economy from overheating.

Total health spending is projected to increase by 5.3% to about $3.7 trillion in 2018, according to the CMS report, and the growth will average 5.5% per year over the next decade. While that’s still faster than the overall rate of economic growth, it’s an improvement from past decades. Between 1990 and 2007, annual health spending increased by 7.3% per year.

Read the original article here.

Source:
Bloomberg News (20 February 2018). "Health prices to outpace inflation for first time since 2010" [Web Blog Post].Retrieved from address https://www.employeebenefitadviser.com/articles/health-prices-to-outpace-inflation-for-first-time-since-2010?feed=00000152-175f-d933-a573-ff5f3f230000

Trump proposes bigger role for skimpy insurance, undermining ACA

Are you an advocate of short-term insurance plans? Get some of the pros and cons in this article from Employee Benefit Advisor on the Trump administration.


The Trump administration is proposing to expand the availability of short-term insurance plans, offering a cheaper health coverage option for consumers, while taking another step to undercut Obamacare.

The Department of Health and Human Services proposed allowing short-term plans to be sold for coverage periods of up to a year, up from the current maximum of three months set by the Obama administration. The plans would also be allowed to offer far less comprehensive coverage than plans sold under the Affordable Care Act.

The short-term plans are likely to appeal to healthier individuals who don’t think they need full coverage, potentially drawing them out of Obamacare’s markets. Combined with earlier moves by the Trump administration -- such as ending the ACA requirement that all people buy health coverage or pay a fine -- the latest proposals could result in higher costs or fewer options for individuals who still want to buy the more comprehensive Obamacare plans.

The Administration said its goal is to give people more insurance options at a time when premiums have been rising.

Bloomberg 

“It’s one step in the direction of providing Americans with health insurance options that are both more affordable and more suited to individual and family circumstances,” HHS Secretary Alex Azar said on a conference call with reporters. “We need to be opening up more affordable alternatives to the all too often unaffordable Affordable Care Act health insurance policies.”

‘Young or Healthy’

The administration, in the proposed rule announced Tuesday, said the short-term plans may lack some Obamacare protections such as required coverage of pre-existing conditions, and coverage for a broad array of services such as maternity care, hospital stays and prescription drugs. But it anticipates that most of the individuals who switch to the plans will be “relatively young or healthy.”

The proposed rule builds on an executive order the president issued last year. The health insurance industry has been divided on the plans, with some insurers already offering them, while others worry they could undermine the ACA’s individual market.

UnitedHealth Group Inc., the biggest U.S. health insurer, already offers short-term coverage, and has said it would explore expanding offerings. Two major industry lobby groups, America’s Health Insurance plans and the Blue Cross Blue Shield Association, have warned that the short-term plans could harm state insurance markets.

Read the original article.

Source:
Bloomberg News (20 February 2018). "Trump proposes bigger role for skimpy insurance, undermining ACA" [Web Blog Post]. Retrieved from address https://www.employeebenefitadviser.com/articles/trump-proposes-bigger-role-for-skimpy-insurance-undermining-aca?feed=00000152-175f-d933-a573-ff5f3f230000