March 2017

We Shop for Cars by Value and Price, Why Don’t We Do the Same for Health Care?

In 1918, 21-year-old automobile whiz-kid Les Kelley opened a car lot in Los Angeles with three used Model T Fords and $450. Soon thereafter, based on his dealership’s data, he gave dealers and banks a list of used cars he wanted to buy and how much he would pay for them. In 1926, he published the first Blue Book of Motor Car Values. Today, it’s known as the Kelley Blue Book®, a pricing guide used by both consumers and the automotive industry for evaluating prices and determining the market value of new and used cars.

Leveraging his knowledge of cars, Kelley gave consumers an easy guide to balancing value and price. Nearly a century later, health care consumers face a similar challenge – knowing how to get the most bang from their health care dollar. In a word, Kelley provided transparency.

Blue Cross and Blue Shield of Texas (BCBSTX) is helping to make the health care system work – leveraging the nation’s largest claims database to provide you with a rare inside look at the true cost of care. We’ve paired our industry-leading data capability with our deep industry knowledge and transparency tools that empower your employees to become savvier and smarter health care shoppers.

“Consumers may not be used to the idea of shopping for health care or be aware of the potential benefits of just a few minutes of research. But given the benefits and rewards consumers can achieve, we should move to a mentality where we shop for health care just like we do for other products,” said Tom Meier, vice president of market solutions for Blue Cross and Blue Shield of Illinois, Montana, New Mexico, Oklahoma and Texas.

Why Does Shopping for Value Matter?
The transparency Kelley brought to the auto industry may be even more apropos to the health care industry. Why not shop for health care services the way we do for cars? A medical procedure performed in the same area by different providers may vary greatly in cost. A challenge is to educate employees who don’t know about health pricing differentials and to motivate employees who know, but are uninspired to act. Getting employees engaged in making choices that provide top value has never been easier – let us help.

In fact, one California company that manages pension and health-covered services for 1.6 million public employees motivated its workers to shop for value when it came to certain medical procedures, according to the publication California Healthline. The company saved $5.5 million over two years through an initiative that set standard prices for knee and hip replacements and prompted beneficiaries to select higher-value hospitals for the procedures.

BCBSTX Transparency Solutions Saved National Employer $1.2 Million
When one of our national employer accounts combined our reference-based pricing benefit design with our Benefits Value Advisor1 program, the company saved $1.2 million and increased employee engagement over 12 months.2

Under reference-based pricing3, plans set a maximum amount payable for certain medical procedures, which can be paired with live customer-care representatives.1 Our advisors helped employees find appropriately priced care with Provider Finder®, an online tool providing access to quality and pricing information for 400,000 in-network providers and 20,000 health care facilities.

This year, we introduced our new Member Rewards3 program, which offers a cash reward when a quality, potentially lower-cost provider is selected from several possibilities for the same medical service or procedure. Member Rewards leverages Provider Finder, and may be supported by a Benefits Value Advisor1, to help consumers navigate their health care experience. The cash reward may vary from $25 to $5004 and depends on the care being performed and the difference in cost compared with other options.

In this issue’s Leadership Perspective, Rewarding Patients for Being Smart Shoppers, we discuss why Member Rewards could be an excellent tool to encourage employees to make cost-conscious choices on more than 100 medical procedures.

“By pairing the right transparency tools to compare costs with a meaningful financial incentive for our members, we can empower members to be smart consumers of care and potentially help lower costs for themselves and their employers,” Meier added.

Consumer-Directed Health Plans: The Other Side of the Story
The Kaiser Family Foundation published a recent survey that polled nearly 2,000 U.S. firms. Of those that offer health benefits, 28 percent offered a high-deductible plan with potential opportunities for savings options, up from 4 percent in 2005. A majority of firms with 200 or more workers, 51 percent, offered the plans, compared with 27 percent of firms with fewer than 200 workers.

Consumer-directed plans give employers control over their health spending by encouraging employees to become informed shoppers. Structuring a plan that encourages employees to use Benefits Value Advisor and Provider Finder, along with Member Rewards, helps workers spend less overall. Consumer-Directed Health Plans: The Other Side of the Story offers insight into how high-deductible plans – rare just a decade ago – are now offered by more than a quarter of employers.

Call your account executive to help determine which of our benefit plan designs could be right for your organization.

1Member communications and information from Benefits Value Advisor are not meant to replace the advice of health care professionals. Members are encouraged to seek the advice of their doctors to discuss their health care needs. Decisions regarding course and place of treatment remain with the member and his or her health care providers. Benefits Value Advisor is a purchase option offering personal engagement by phone – helping members choose a potentially lower-cost, quality location.

2Results from one national account from one of Blue Cross and Blue Shield’s five Plans. The case study is an example of potential opportunities for savings. Individual group results may vary.

3Reference-based pricing and Member Rewards are buy-up programs.

4Ranges may change based on geography and account claims.

Source: The History of Kelley Blue Book