Numerous news reports on the high cost of medical services and variations in price from region to region are bringing price transparency to the forefront – especially with more consumers empowered to select their own health plans – both on public exchanges and for employee-consumers via private exchanges. Savvy health care consumers are increasingly leery of trusting the first price they’re offered for a treatment or procedure – and they should be.

A recent article by KQED, a public radio station for Northern California, explains a new program that it has organized to bring clarity to the often-cloudy world of health care pricing by crowdsourcing pricing data. Listeners are invited to submit prices they paid for various procedures to an online tool called PriceCheck and compare those prices against those submitted by other listeners to get a sense of how much price variation to expect in the area.

PriceCheck data indicates the procedures that appear to be the worst offenders in price variation are:

  • Mammograms, reported to cost between $134 and $1,200
  • Back MRIs, which ranged from $255 to $3,700

PriceCheck is a voluntary, opt-in tool, so it doesn’t give comprehensive price comparisons. However, since such a tool does not yet exist for San Francisco Bay Area residents, the KQED PriceCheck tool is a helpful resource.

Consumers are increasingly advocating for price transparency nationwide, in some cases, sparking bidding wars for certain procedures. While PriceCheck prices are representative of cost differences only in the San Francisco Bay Area, such a tool could be useful in many local markets, since there are price variations everywhere.

This year’s annual report of the Trustees for Medicare and Social Security revealed that the Medicare trust fund will not run out until 2030 — four years later than last year’s estimate.

The extension was attributed, among other things, to reduced hospital admissions and to Part D payments declining 4% from 2013 estimates due to the use of generics.

In an article on the report in USA Today, Bryce Williams, managing director of Towers Watson’s Exchange Solutions, offered the opinion that future savings could be in store beyond what is being projected, considering that the ACA now covers many people who were previously uninsured. This could result in more people reaching the Medicare eligibility age of 65 without a lifetime of chronic health issues going untreated or unmanaged, putting less strain on Medicare coffers.

Said Williams, “[The ACA is] a stealth benefit that’s going to further extend the life of Medicare, perhaps substantially, without having to round up new funding.”

Keep an eye on the headlines for more Medicare cost-saving measures, such as changing the way doctors are paid and the creation and use of more quality metrics to improve care and weed out excessive fees.

Officially established under the Affordable Care Act in 2011, Accountable Care Organizations (ACOs) are becoming more popular with employers as a way to provide coordinated care for employees with chronic conditions while limiting unnecessary spending.

A recent article on ACOs in Employee Benefit News (EBN) reported that a growing number of large companies are “on board” with the notion that better coordination will lead to improved care for employees and lower costs for employers.

According to the 19th Annual Towers Watson/National Business Group on Health (NBGH) Employer Survey on Purchasing Value in Health Care, more than one in four employers expect growth in a variety of new methods providing quality care while mitigating costs, including ACOs. In fact, 28% of employers surveyed said it was likely that (employer-sponsored) care will be delivered through highly coordinated provider models such as ACOs or Patient Centered Medical Homes (PCMHs) over the next five years.

The EBN article noted, however, that some warn it’s too early to tell if ACOs will live up to their promise. Still, while use of ACOs is still in its early stages, more employers are considering ACOs as a valid method for evaluating vendors.

From the Towers Watson/NBGH survey, 81% of responding employers said, “Availability of ACOs and/or PCMHs with incentives and penalties to providers based on quality, efficiency and outcome” was an important or somewhat important factor in selecting a health plan vendor.

For previous posts on ACOs from the OneExchange Blog, see below:

Eighty-nine New ACOs Announced; Total Of 154 Now Serve Over 2.4 Million People

Nine Pioneer ACOs May Leave The Medicare Program

In February 2012, the Alameda County Employees’ Retirement Association (ACERA) made a change in the way it was offering health benefits to its retirees; the public pension fund decided to transition its Medicare-eligible retirees and their dependents to Towers Watson’s OneExchange.

Now, two years after the initial transition, Kathy Foster, ACERA’s benefits administrator, is speaking publicly for the first time about the decision and how it’s going. Alameda County, located in the East Bay near San Francisco, is the nation’s seventh most populous county. ACERA is responsible for ensuring that all county employees have cost-effective health benefits when they retire.

Said Foster in an April 2014 Towers Watson case study, “Through the exchange, we are able to provide our retirees a wide choice of high-quality Medicare plans as well as expert advice to help them choose among them. And we have confidence in the predictability and sustainability of the health benefits we will provide into the future.”

In an article in Employee Benefits News in June 2014, Foster touched on the challenges of running a public pension plan and managing costs, explaining how the association’s group plan offerings continued to get more and more expensive each year. According to Foster, ACERA was able to cut its costs in half, saving $2.5 million in 2013 alone for its more than 1,200 retirees.

For the complete Towers Watson case study click here. To read the article in Employee Benefits News click here. (Please note you will need to register to access the article, which is free.)