Testimony: Pay Patients to Find Affordable Healthcare

by Charles Katebi

Testimony before the Wyoming Labor, Health, and Social Services Committee, August 25, 2016

My name is Charlie Katebi. I'm a policy analyst with the Wyoming Liberty Group. I'd like to thank the Department of Health for researching and bringing greater attention to Wyoming's lack of healthcare transparency, and why we need greater clarity for patients.

Patients need simple and transparent prices to find cost-effective healthcare. But even when patients have transparent prices, they often ignore them. One survey found that 98% of health plans already offer cost calculators in some form. But only 2 percent of patients actually use them. After all, patients only pay a small fraction of their healthcare costs. As soon as they pay their deductible, it makes no difference whether their MRI costs $500 or $5,000.

However, states are starting to combine price transparency with innovative patient incentives. Several states' health plans work with a company called Vitals SmartShopper that helps patients compare medical prices online for a variety of medical treatments.

But unlike other price transparency schemes, 90% of Smart Shopper's patients actively shop for affordable options. This is because Smartshopper pays patients a portion of the savings they generate when they choose a lower cost provider.

New Hampshire recently partnered with SmartShopper to introduce these incentives in their public employee health plan. Within two years, the program generated $24 million in savings for the state and $2 million in rewards for patients. Some of the highest savings came from Colonoscopies, Knee Surgeries, and MRI's.

Smartshopper now works with health plans in Kentucky, Texas, and Louisiana. These programs are transforming these states' healthcare systems by rewarding value, instead of volume. Instead of patients, providers, and insurers constantly fighting each other's conflicting interests, everyone has an interest in better healthcare at a lower price. Cost effective providers get more business, insurers pay cheaper claims, and patients get checks in the mail.

Many private sector employers are also partnering with SmartShopper to help employees find quality healthcare at an affordable price. In 2015, HealthTrust enrolled employees in the SmartShopper program. After just one year, SmartShopper saved Health Trust $1.5 million in medical costs, exceeding their goal by 50%.

So price transparency can work, but patients need a reason to favor lower cost providers. Wyoming should consider SmartShopper's incentives as we wrestle with rising healthcare costs.