But What About the Carrier’s Tools?

Meme asking "BuT WhaT ABout tHe CArrieR's ToOl?
(The above language is intended to be dripping with sarcasm.)

Do you know how often I hear the above question from brokers who are looking to provide a price transparency tool to their employer groups? So much so that, like a typical millennial, (Don’t worry I won’t say it, but it starts with OK and rhymes with doomer) I decided to make a meme out of it. Now, why does this question get asked? There could be a couple of reasons. The broker genuinely believes that the carrier’s tool is sufficient (concerning) or the broker doesn’t really care about helping their clients, especially those on HDHPs with access to CDH accounts, navigate their healthcare experience (very concerning).

So, what if the carrier you’re working with provides a price transparency tool and they deem it sufficient? Why should you, as the broker, consider this an insult to your intelligence? If the carrier tool was effective at reducing healthcare costs, then you might expect to be presenting employer-partners who currently have that carrier, and their tool, with a lower premium next year due to claims savings from employees using the tool. And secondly, if carriers are committed to reducing their member’s healthcare costs (like they claim), then why aren’t they supporting the charge to eliminate the secret pricing in healthcare and expand the creation/usage of REAL price transparency tools?

Instead, American’s Health Insurance Plans (AHIP) lobbying group recently commented on the latest proposed rule from the Trump Administration, stating, “consumers deserve transparency about out-of-pocket costs to help them make informed decisions about their own care”… so far, so good… and that “transparency should be achieved in a way that encourages – not undermines – competitive negotiations to lower patients’ and consumers’ costs and premiums” Wait, what? Isn’t the intent of transparency to undermine these “competitive” (please, I beg you to note the quotations) negotiations. Transparency of these negotiated rates is for the benefit of the patient, promoting competition among providers for the patient’s sake, not the providers or carriers. This quote naturally raised my interest, and as such, I searched for AHIP’s approach towards price transparency. And found the following;

Protect free market negotiations to ensure more choices and lower costs for consumers. Consumers want to know how much their care will cost them – and we should provide them with that information…Typically, health care providers (hospitals, outpatient facilities, physician groups, or solo practitioners) compete against each other to be included on a health plan’s list of preferred providers…when providers know who the other bidders are and what they have bid in the past, they may bid less aggressively, leading to higher overall prices.”

So AHIP is trying to say that releasing their negotiated rates are going to lead to higher costs? Because they (hospitals, outpatient facilities, physician groups, or solo practitioners) compete against each other to be included on a health plan’s list of preferred providers. CMS and consumers want providers instead to compete for their business by making healthcare a free and open market, not just for insurance carriers but for all.

Let’s say that AHIP is right and some providers DO raise their pricing to match the highest cost provider in the first year. What do you think happens in year two when patients have abandoned the higher cost providers in favor of high-quality, lower-cost providers instead?  Will the same trend occur? Or will the free market balance itself, as it has for literally everything else? I think we all know the answer to this one.

Like any functioning business, carriers want to grow their revenues. Given that carrier’s primary source of revenue is premiums or the price of risk transfer and they want to “win” on their bet of pricing risk, carriers want to make sure that the premium collected covers the cost of the claims to be paid out.  What makes a group riskier? Either the increased price of services received or increased utilization of services. Given group’s utilization operate within a +/- 3% year over year, the only lever that can really impact premium is the price of procedures and services. Therefore, higher prices of services, higher risk, higher premiums. Why would a carrier want to expose low-cost providers to their consumers, if it will have a direct impact on their top and bottom lines? And don’t get me started on the dysfunctional MLR rule, which sets the ratio of claims to profit/admin at 80/20. Rather have 80/20 of medium pizza or a large pizza pie?

If AHIP wanted to assist employers and employees in finding low-cost, high-quality care, they could do so overnight. They know the negotiated rate for every procedure at every provider because they, in fact, negotiated these rates. But it would cut their revenues by more than half. And we all know, carrier’s revenues come in the form of your employees’ wage growth, affordable healthcare, and ultimately, financial well-being.

Invest in a price transparency platform that has no bias, and whose ultimate goal is to drive down costs for employers and their employees. Invest in a platform whose performance is contingent upon how much they saved you, not how much you spent. Invest in a platform whose sole mission is to ensure that you never overpay for healthcare again.

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