Price matters and depending on a consumer's sensitivity to price the results can be good, bad or ugly – When consumers are insensitive to price, as is still the case for many health plan members, prices rise whether overtly or under the cover of "greater integration for the greater good". A Commonwealth Fund supported report highlights several ways to combat price increases caused by market consolidation, and the bottom line is that the best weapon is the consumer armed with information on price and quality and sensitive to price differences. When done right, it is very effective as Jamie Robinson and colleagues demonstrated in a CalPERS pilot. Another area where price sensitivity is working is for routine sick care. In that market segment there are rapid changes afoot with the deployment of stand-alone clinics and mini medical offices in other facilities. An example is ZoomCare in Portland which offers same day appointments with health care professionals, choosing from among sites and clinicians through an easy-to-use web portal. But when done wrong, price sensitivity simply leads to self-rationing both needed and unneeded care, with little distinction between both. As reported in the NY Times, several papers have now highlighted the bad side of price sensitivity and its impact on kids and moms and other health plan members. That has prompted our colleagues at the UofM VBID Center to call for redefining prevention to include secondary prevention or, in laymen terms, the routine care of chronic and other conditions.
What this means to you – For those who doubted the power of the consumer's purse in changing the industry, the facts are in and they are clear. This does force us to think very carefully about the design of health plan benefits and the use of certain mechanisms such as reference prices. In a recent blog post, Timothy Jost does an excellent job articulating the ambivalence of the current regulations on reference pricing, and it's not too hard to conclude that if payers aren't careful, this avenue will be soon closed, and that would be a shame. The ACA has instituted many changes to health benefits plans, not least of which is a max on out-of-pocket costs. That max applies only to covered benefits delivered by in-network providers. This explains why some are rushing to narrow network, authorizing plan members to seek care elsewhere, and instituting reference prices above which the plan member is at full risk. However, some are going further and defining reference prices for an episode of care within contracted providers but deeming providers whose prices are above the reference as being "out-of-network" for that particular episode of care, and that starts making things ugly. As a result, plan members who might be getting care from a network provider and fully covered for some episodes might not be for others. We can expect confusion, and a legitimate outcry when a plan member discovers after the fact that she has a significant bill to pay and could face bankruptcy. That's just silly and there's an easy way to avoid that ugly scenario: it's called a "stop-loss" provision for reference priced episodes. Failure to avoid the ugly outcomes of price sensitivity could derail the positive benefits that can and should continue to come from it. So let's get rid the ugly, fix the bad, and focus on the good.