A Sea Change in Insurer Thinking
What a difference two years have made in the health insurance industry! In October 2006, following a call by President Bush for price transparency, America's Health Insurance Plans told Medical Economics that some of its members worried that publication of what they paid providers could hurt competition by setting a "floor" for payments in particular markets. Just one major insurer, Aetna, was providing some cost information to its members in a few markets at the time.
All of a sudden, the situation is changing fast. WellPoint, which includes Blue Cross Blue Shield licensees in 14 states, and four non-WellPoint Blues plans jointly announced today that they would begin giving their members access to comparative cost information on 39 medical procedures performed at hospitals, ambulatory surgery centers, freestanding radiology facilities, and other medical facilities.
The other plans in the consortium include Highmark (Pennsylvania), Premera Blue Cross (Washington), Blue Cross and Blue Shield of Minnesota, and Blue Cross Blue Shield of Michigan. They and WellPoint will initially roll out the cost range information, based on paid claims data, on a limited basis in the states where they operate.
Meanwhile, Massachusetts residents can now search a new state website to compare the cost and quality of care at different hospitals. This website will give all consumers--not just plan members--access to information about how much insurers pay individual hospitals for surgical procedures and for treating illnesses such as pneumonia. Massachusetts' 2006 healthcare reform law required the publication of this comparative data.
Some other states provide data on hospital charges. For instance, Minnesota has a website that provides state residents with comparative price and quality information for the 50 most common inpatient conditions and the 25 most common same-day procedures. California also publishes hospital price information. But there's a big difference between that and posting the amounts that insurers pay hospitals, which are usually a small fraction of their charges. So, for example, when the Minnesota Blues starts publishing its cost data, its members will for the first time have a realistic comparison of the prices their plan pays various hospitals for specific procedures. By looking up their plan benefit information, the consumers will be able to estimate what they will owe for these services out of pocket.
Why the sea change in health plan thinking? The press release reveals little, but it seems clear that the increasing shift of health costs from employers to consumers has made the insurance companies look at this issue in a different light. They have concluded that, whatever the fallout from publishing terms of their contracts with individual providers, they must provide consumers with the information they need to make discriminating choices. If this results in more plan members using less expensive providers, the insurers and the self-insured employers they represent will see big savings.
How might this new approach affect price negotiations between plans and providers? That's hard to say at this point, but the Blues plans are publishing cost data on a limited number of procedures. Also, one or two insurers are dominant in most markets, and large hospital systems dominate the provider side in many cities. So, unless the insurers' move does make consumers vote with their feet, the publication of cost data might not change the balance of power very much.