The price is right

Health insurer Priority Health has announced it has contracted with Healthcare Blue Book to publish cost and quality information for more than 300 procedures by facility and physician for its insurance members in Michigan.
The insurance company becomes the first in Michigan to offer the service and comes as employers and insurers are seeking ways to provide more cost and quality information to businesses and individual members as a means of curbing escalating healthcare costs.
The service, set to go live this summer, is especially valuable to Priority Health's members, nearly half of whom are enrolled in high-deductible health plans (HDHPs) where members bear greater out-of-pocket costs for the care they receive in exchange for lower insurance premiums.
"We've been exploring transparency programs and ideas for quite a few years," said Molly McCarthy, associate vice president of provider network performance for Priority Health. "However, we reached a point recently where the proportion of members that are in high deductible plans has hit an all-time high at Priority Health and on a daily basis we get calls from our members to our customer call center asking questions like: 'My doctor wants me to get a chest x-ray. What is it going to cost?' So increasingly our members are asking us about their options."
"When individuals pay more out of their own pockets, they become more engaged in their health care decision making," said Michael Freed, Priority Health president and CEO in a prepared statement. "We feel it's our role to improve the health and lives of our members by providing the information they need to make important health care decisions."
The move to publish the comparative cost and quality information comes as employers are seeking ways to keep healthcare costs in check, and as many do this, by turning to offering defined contribution and HDHP options for their employees.
According to Priority Healthcare, its partnership with Healthcare Blue Book will allow members to look up information on any of the 300 procedures and receive price range information on the procedures' provider and facility price rankings, as well as quality metrics.
The new tool will provide regional information on procedures, and using data it collects on an ongoing basis, will be able to publish a "fair price" for each procedure. It will also give members the full price range of procedures, facility price rankings and quality metrics for each facility.
As an example, the cost of a knee arthroscopy may range from $1,751 to $6,087 between facilities according to the data collected by Healthcare Blue Book. In this case, the fair price for the procedure is determined to be $2,110. With this information, Priority Health will provide its members with a color-coded, stratified list of costs for the procedure by facility, based on a combination of Healthcare Blue Book's data and its own internal claims and contracted rates. Green indicates a cost at or below fair price; yellow, slightly higher than fair price; and red, the most expensive.
According to Jeffrey Rice, MD, founder and CEO of CareOperative LLC, the parent company of Healthcare Blue Book, the company works primarily with insurers and self-funded employers who want to cut overall healthcare costs, but also provide a tool to employees who are bearing a higher percentage of total healthcare costs.
"It is a very complicated healthcare system. (Finding treatment prices) is not like finding out the price of gas at the corner store," Rice said. "In this environment there are different prices depending on the network and contracted rates, et cetera. So that is where we come in."
According to John Fox, MD, associate vice president of medical affairs at Priority Health, publishing this information is intended to empower its members. "It made sense for us to partner with Healthcare Blue Book, a trusted leader that works directly with employers, to take the next step in health care transparency and enhance the information we make available," said Fox in a press release.
Further, McCarthy noted, that while the hope is providers will find a way to compete on price, given a more transparent environment, Priority Health has a long-standing commitment to the quality of care delivered to its members.
"While we are calling out cost variation, we would encourage our members to pay a little more for a service, if they are getting the best quality in our entire network," McCarthy said. "We would hope that if you begin leveling the playing field from a cost perspective, that hospitals in particular would increasingly be competing on quality."