In the final wording of the Transparency in Coverage government mandate for health plans, the term “shared savings” is used 51 times and “incentives” 19 times. So let’s talk about what shared savings and incentives have to do with health care price transparency. Simply put, “shared savings” refers to a financial reward (gift card, check, debit card, etc.) that is given to a health plan member for choosing lower-cost care. Those members get to share in the savings that a health plan or employer receive due to less expensive claims. Rewards can range from $25 up to hundreds of dollars for some services.
Why Should We Care?
Cost is the most common reason people avoid or delay care. As mentioned in the mandate, “shifts in plan design and enrollment are correlated with consumers bearing a greater share of their overall health care costs.” However, the problem plans face is bigger than a cost estimation tool alone can fix. Why? Because many plans already offer cost estimation, yet the utilization by members isn’t high. One cited study “noted that only 12 percent of participants, beneficiaries, or enrollees currently use the tools available to them.”
How do we increase utilization? The final rule points out that those with health insurance “often lack incentives to seek care from lower-cost providers” and shared savings programs can increase engagement with price transparency tools – encouraging employers to “adopt incentives for consumers to choose more cost-effective care.” HealthSparq’s own consumer research shows that 91% of folks are interested in incentive programs and 64% believe incentive programs are more valuable than other benefits offered.
It’s Time to be Innovative
COVID-19 has created a tectonic shift in the way health care is managed and delivered, accelerating people’s reliance on their health plans’ digital solutions at a pace we couldn’t have imagined at the beginning of 2020. The federal government acknowledges that “unique plan designs would motivate consumers to make more informed choices by providing consumers with tangible incentives to shop for care at the best price.” They go on to comment that “innovative benefit designs” can “increase consumer engagement in health care purchasing decisions.” What’s in it for plans? Simply put, savings. Recent examples of average savings earned via HealthSparq Rewards include $5,280 for ACL repair, $808 for colonoscopies and $461 for CT scans.
Here’s what’s clear: Plans and employers need ways to educate and engage members in the cost conversation. Sharing part of the savings for going to cost-effective providers is a creative way to increase the value of money spent on health care without shifting more of the cost burden on members.
Bonus Medical Loss Ratio Benefit
There’s another significant benefit of offering a shared savings program. The Department of Health and Human Services (HHS) allows plans that institute these types of programs to take credit for such shared savings payments in the numerator of their Medical Loss Ratio (MLR) calculations starting with the 2020 reporting year. This means that plans will not be required to pay MLR rebates based on “shared savings” payments for members choosing to obtain care from a lower-cost provider.
However, at the end of the day, this mandate is not about managing bottom-line business decisions. It’s about increasing consumer engagement in health care decisions to address rising health care costs and providing meaningful ways for people to improve their own health outcomes.
To learn more about how shared savings benefits your members and groups, and your bottom line, reach out for a demo of our HealthSparq Rewards program.
