Pay­ing pa­tients for sav­ing money

Modern Healthcare - - NEWS - By Beth Kutscher

The term “shared sav­ings” usu­ally brings to mind the CMS’ ac­count­able care pro­grams and the shared re­wards for hos­pi­tals that save money over the bench­mark costs of care. But a select num­ber of tech­nol­ogy com­pa­nies are bring­ing the con­cept of shared re­wards di­rectly to con­sumers, de­sign­ing pro­grams that give them cash in­cen­tives for go­ing to a lower-cost provider or get­ting rou­tine pre­ven­tive screen­ings.

Vitals, a Lyndhurst, N.J.-based com­pany known for its doc­tor rat­ings, ac­quired Smart-Shop­per in 2014 and re­fash­ioned the soft­ware as a tool for on­line com­par­i­son shop­ping—with a twist. Con­sumers sign up for the ser­vice through their health plan or em­ployer and re­ceive cash in­cen­tives for choos­ing the most cost-ef­fec­tive care.

The av­er­age sav­ings per episode of care was $625 in 2015, ac­cord­ing to Vitals. Em­ploy­ers saved $12 mil­lion while con­sumers took home nearly $1.5 mil­lion in re­wards. Health plans and em­ploy­ers pay out the re­wards un­der the Vitals brand to avoid the ap­pear­ance that they’re di­rect­ing care. Checks to con­sumers range from $50 to $500, said Mitch Roth­schild, Vitals’ founder and ex­ec­u­tive chair­man. “It’s enough to change be­hav­ior,” he said.

In De­cem­ber Vitals raised $41 mil­lion in a Se­ries D fi­nanc­ing round led by Gold­man Sachs. It ex­pects to of­fer SmartShop­per in up to 20 states by yearend, up from five at the end of 2015.

Another com­pany sell­ing such ser­vices is Chicago-based HealthEngine, which was founded in 2012 by a physi­cian and an econ­o­mist who say they saw a sim­i­lar pro­gram work well in Europe. HealthEngine also pays peo­ple for get­ting pre­ven­tive care. Last month, dur­ing Na­tional Colon Can­cer Aware­ness Month, it of­fered up to $500 to peo­ple who re­ceived colono­scopies.

Em­ploy­ers say the part­ner­ships help them lower their in­sur­ance costs.

The state of Ken­tucky sent out a re­quest for pro­pos­als in 2013 to select a price trans­parency ven­dor and chose Vitals be­cause of the re­wards com­po­nent. “We had a lot of peo­ple who didn’t think about health­care costs be­yond their co­pay,” said Jenny Goins, the state’s deputy com­mis­sioner for em­ployee in­sur­ance. The state has seen $10 mil­lion in sav­ings since 2013 and of­fers SmartShop­per to all state em­ploy­ees and re­tirees who are el­i­gi­ble for in­sur­ance cov­er­age.

Yet it re­mains to be seen how much con­trol con­sumers re­ally have over their health­care dol­lars, es­pe­cially when the most ex­pen­sive episodes of care are typ­i­cally the un­planned ones.

Us­ing 2011 claims data, the Health Care Cost In­sti­tute cal­cu­lated in a re­port re­leased last month that only 7% of outof-pocket costs, or $27.7 bil­lion, was spent on “shop­pable” ser­vices. Of that amount, 44% was spent on out­pa­tient physi­cian ser­vices while knee and hip re­place­ments—the sort of ex­pen­sive pro­ce­dures that cap­ture the most at­ten­tion in dis­cus­sions about price trans­parency— rep­re­sented only 0.3% of out-of-pocket spend­ing.

Still, the num­ber of peo­ple in high-de­ductible plans has grown about 15% an­nu­ally over the past five years, ac­cord­ing to Amer­ica’s Health In­sur­ance Plans. And stud­ies have shown con­sumers can save money if they shop on­line. What’s less clear, though, is whether they’re get­ting high­er­value care or just less-ex­pen­sive care.

SmartShop­per in­cludes both qual­ity and price data for Ken­tucky health plan mem­bers, Goins said. She also as­serted that the tool is valu­able be­cause it nudges peo­ple to take an ac­tive role in their health. “We’re en­cour­ag­ing our mem­bers to do what they do in most other ar­eas of their lives.”

Dur­ingColon Can­cer Na­tional Aware­ness Month, Chicago-based Health En­gine of­fered up to $500 to peo­ple who re­ceived colono­scopies.

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