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As health care costs continue to rise, Texans are feeling more and more pressure to be savvy spenders. But how is that possible when they can’t see the price tags attached to their health care services? This panel of experts includes two Blue Cross and Blue Shield of Texas executives -- Darrell Beckett, DSVP of Sales & Marketing, and Vijay Murugappan, BCBSTX's Vice President of Strategy & Value. You can also listen to the complete discussion in podcast form on Apple Podcasts and SoundCloud.
Blue Promise is a podcast and online video blog that aims to address complicated health issues with candid conversations from subject matter experts. New editions are published regularly and are hosted by Dr. Dan McCoy, President of Blue Cross and Blue Shield of Texas, and his co-host, Ross Blackstone, Director of Strategic Influence.
As healthcare costs continue to rise Americans are feeling more and more pressure to be Savvy Spenders. But how is that possible when they can't see the price tags attached to their health care services.
Thanks for joining us for this edition of Blue Promise. I'm Dr. Dan McCoy I'm here with Ross Blackstone.
Thank you, Dr. McCoy. We have two guests here with us today Darryl Becker, is Divisional Senior Vice President of Sales and Marketing and ViJay Murugappan is Vice President of Strategy and Value, both with Blue Cross and Blue Shield of Texas. Thank you for being here.
Good to be here.
So, we hear a lot about people talking about the right to shop and the importance of transparency in health care. What does all of that mean to you Darrell you want kick us off.
Sure. I think you know in general everyone knows health care is pretty complicated. And so, the right to shop is to give people enough information to make good smart health care decisions.
So, let's talk about that when you say more information. I mean ViJay it's complicated right. So, it's not just the cost, because there's other issues like quality.
Absolutely and if you think about the consumer or the patient behavior in health care it's fairly unique because of two reasons; one is the information asymmetry between the patient and the doctor right. So, when you go to buy a TV for example you can educate yourself sufficiently enough about the OLE versus LCD can educate yourself on the features that when you go to the store you you're fairly educated consumer…
and you can see it
and you can see it, that's right. But when you are going to a doctor, you're competing with many, many years of intense medical training and you cannot close that information gap. So, you need that other party and that information in order to be able to be a good consumer. The second challenge is consequence of bad decisions. Right. So, if you bought a bad TV if you made a mistake buying a bad TV you wasted fifteen hundred dollars maybe your viewing pleasure is not that great. But the consequence of making bad decisions in health care are fairly large.
You could return the TV.
You can return the TV, but you know you make a bad choice in health care, it's not only physically damaging in many cases it's mentally and financially damaging for you and your family as well.
So, isn't there one more issue that goes on to, right? Because in those decisions you're generally happy you're ready to watch a football game right. You're excited about buying a new TV but often in health care you're scared, you may be undressed…
You're in an exam room in a foreign place. You don't understand the terminology. That adds a whole new kind of element for that.
So, Darryl I know that some companies though are trying to help people navigate that even though it's challenging but there are some things. Tell me some things that companies are doing to try to navigate and curate that information.
Well to play off the point of ViJay was making. Employers are trying to do a better job at helping their employees and their family members be better decision makers of health care. Their own you know guide their own care.
And that's a big advantage. Because that that would happen way before these, kind of emotional decisions, would occur.
Right. They're trying to provide as much communications as they, ahead of time at a time where they need care and provide access to information which is really important. So, some of the things that employers are doing is requiring health plans, like us, to provide that information at the time the individual needs it.
Look give me an example of what we might be asked to provide.
What's the cost if I need to get a knee replacement or I think I need a knee replacement. How much is that going to cost me. I need a colonoscopy how much would that cost. It's really surprising the variance in costs across the country and everyone knows that. We've read a lot about that but it's also there's can't be huge variances just within the same community.
Well it's just that we have a couple of numbers specifically about knee replacements Yale University and the University of Pennsylvania did a study that shows a knee replacement surgery in Austin can range anywhere, from Austin Texas, around seventeen thousand dollars to about twenty-eight thousand dollars. So that's about eleven-thousand-dollar difference. In Dallas the range is about seventeen thousand dollars to forty-six thousand dollars. So you know to your point there is a pretty large variance in and to your question Dr. McCoy, employers are they interested in this. Well we know that they are, the National Business Group on Health and Towers Watson did a survey and they found at least a third of employers are interested in providing these transparency tools to their employees.
So, kind of going along on that TV, I love the TV analogy because if you walk… Let me ask you this question. So, it often would seem that if you walk into any of these stores and you see a really, really expensive TV it could be thought of maybe that's the best TV.
But that's not true necessarily in health care. Is that fair?
That is fair, and I think you know you earlier talked about it, quality information etc. and that may be a challenge. So, for knee replacement surgeries you don't cost you don't know quality. But there's so many other things that you that are pretty much standard by getting an MRI in one place versus another an MRI is an MRI. But they don't have to cost 30, 40 percent different from each other.
So isn't that really the challenge in doing this though, because on things like an MRI which are pretty commodity service
It's an x ray image it's really clear. You know this is what you order, and this is what you pay and you can define quality and I know there's levels of MRI and magnet intensity and Tesla an all that but the issue is at the end of the day it's an MRI, but it gets more complicated right, when you have things like a knee replacement.
Because how do you determine that quote unquote quality of; the doctor, the hospital, becomes more challenging right. You could look at complications but may or they may or may not be the right threshold to be able to show. And then the flipside of it is the cost is challenging to right because there's a lot of variables in enter into the cost; Anesthesia, drugs, physical therapy makes it more complicated. So, Let's start with Darryl. This is a good question for you. I mean I don't pick on you but you've been around here a long time so you've seen a lot of changes in health insurance over the years but were higher deductibles kind of meant to encourage people to understand cost and is that sort of gone away because health care costs have just gone so way up that by the time somebody has a knee replacement to ViJay's point they've met their deductible.
It's a little bit like the chicken or the egg. Actually, higher deductibles were a necessity of employers trying to find affordable care, right. I mean higher that your deductible is the more affordable the premium becomes. So, there was some cost shifting that's gone on over time from the employer to the employee. What they've done along with that is they've said to themselves Look we don't want to just shove this these costs to individuals without giving them tools to arm them to make better decisions so the higher their costs are the better-informed decisions they can make about their health care. So, telling them about the disparity or the differences in the cost of care could actually save them money as individuals
And coupling that with rewards, right. So now even beyond that if you pick the appropriately price but quality plays, you provide them rewards and it's not just the monetary value of the reward but the incentive that the rewardee order places on it that drives people to understand that this is better quality and appropriately. Right.
I think the big question there is whether or not the incentive or disincentive is going to be enough to be able to influence the decision and it seems to me I mean we've kind of been we've kind of ended up in a pretty lousy system because what happens now is that the information is complicated. You can't really curated it very well, some of it is hidden, people don't actually tell you what charges actually are, benefit designs are… you can't… you've kind of reached the limit to some degree on what incentives and disincentives can do and so it kind of creates this open market where prices just go up and up and up and nobody seems to be able to know about it or understand to do anything about it.
So that was going to be my question Darrell. Do people actually use these tools.
Yeah, I think they do. I think all employers including us as a health plan would like to see the utilization higher. The utilization does increase, it improves over time the more… more and more people become familiar with the tool and how to use it, a little bit of word of mouth. But certainly, those that have used tools or some of the services that we have available that where individuals can actually call us and find and speak with, live with a Benefit Value Advisor that can actually navigate the same information for them has definitely helped improve the utilization and the use of these types of tools.
So, I have a couple of numbers and not surprisingly only 8 percent of people used some of our services that we offer. In 2017, only 8 percent of them, people actually use them. So, there's a lot of opportunity there. You know people are discouraged by the price of health care, but they aren't necessarily taking up advantage of the tools at their disposal. In 2015 Kaiser health poll show that only one in 10 Americans saw price comparison data before going to a hospital or a doctor. But it does work.
I don't see that as a bad thing. I don't see these numbers as bad. Given where we as an industry, health care industry broadly have started from. If you think about the consumption pattern these are not consumption items that happen once a month. You don't get an MRI every four months you maybe get it twice a year or twice in your lifetime or three times right.
And so, people don't… you may educate them, employers may educate them, but that education was nine months ago and now when I'm about to do it, it doesn't click, right. So, I find these numbers to be encouraging. I think it's a slow hockey stick curve but when we hit the inflection point, I think there will be a lot of benefit to the industry.
Yes, let me talk about something real quick. So historically what's happened is that there's been a distant to some degree a disincentive meaning that if you didn't shop around or you didn't ask for prices you could spend more money right. So, I mean so there was a little bit of that you might pay a higher copay. Deductibles might be higher, benefits might be worse, might get bad quality, right. But one of the things that's changing is this idea of using incentives to encourage people, it would be like giving someone a hundred bucks to go buy the best TV, right? So, Darryl I know you've been involved in some of those situations, talk about member rewards. I think that's pretty cool
It is really cool. You know it's one thing that for an employer to communicate these tools and make them available it's another thing for an employer to say look if you use the tools and you make a smart decision, we'll actually pay you for that decision. So a member rewards does just that for certain elective procedures individuals can either go to the web site, use their mobile app or call a benefit value advisor to find out what are the alternatives where can I go to get the same care and what are the prices and if they make the same or if they make a decision to choose the lower cost alternative it can actually be paid as an amount of money for that.
So, walk me through an example
I'll give you a great example. There was an individual located in the Northeast. She had Crohn's disease and she was getting monthly infusions. She was getting these infusions at a facility. They were costing … the treatment was forty thousand bucks. Just because of the reward that she learned about from her employer, she chose a clinic to get that same infusion…
A different one
A different clinic so hospital facility was where she was going there was the same service available at a clinic. The clinic charged four thousand dollars for the treatment. Huge savings and the reward to her was five hundred dollars a month.
Now that's a substantial.
That's substantial, it covers her whole deductible for the year. She hasn't to worry about co-pays etc. and she gets the same service, the same treatment.
So, she ended up with to some degree better care that was more affordable.
For her long term because Crohn's disease is not curable so she's going to be on that drug for a long time.
Better satisfaction patient satisfaction overall.
I know it for something serious. But even for something minor you can still get rewards. I think the range is 25 dollars to five hundred, so you know 25 bucks here and there is you know that's change in your pocket right.
So, we do have some numbers that show even if it's on the lower end, programs like member rewards do save a lot of money. in 2017 We saw two point one million dollars in savings. So, while it can also benefit the employee or a member it can also, that can be a big chunk of change for an employer who sees a large reduction in costs and also just wanted to point to something you said ViJay you know some of these bigger procedures might not happen as frequently so people might not use these rewards and these transparency tools as often. But we saw that imaging procedures actually saw a 36 percent reduction in costs for people choosing a lower cost provider and I would think that imaging is probably something that happens a little bit more frequently than the actual surgery, right.
It's a commodity thing as well.
Right. So before we get out of here so I'm gonna kind of go down something that ViJay mentioned which I think is pretty fascinating and that is a lot of tons of people get their health insurance packet from their employer and maybe I'm just speaking from personal experience and I run a health plan and I do the same thing you get home with your benefit packet and you see how fast you can sail it across the dining room table
because nobody really opens it because you don't need it and then all of a sudden when you get sick somewhere six months down the road you get to find that paperwork, figure out how to figure it out. So, it's not like we have a lot of experience that's not where we're finding a restaurant on your app and we're really comfortable picking a restaurant or on that online merchant site which I won't mention by name. But we're really comfortable figuring out how to pick you know something delivered to our house in 24 hours. But healthcare is different because it's not necessarily, it's impromptu. We don't know when we're going to need it it's ad hoc.
So, one of the other players that plays a role here is the health care provider. So, there are some roles I think right where health care providers can help curate that content. You want to talk a little bit about maybe what might be emerging in the industry.
Yeah for sure. I think you know like I said the you cannot close that information asymmetry gap and so you have to put the parties that make decisions, side by side. Right? So, the physician knows a lot about medical field conditions and clinical actions that you can take but they don't know enough about the patient's behavior outside of that small interaction that they have with them. So, my belief is that if you create a system where you provide the right information to both the physician and the patient at the point of care then together, they will make much better decisions than they are able to make today. So, over the last 30 or so years this notion of the family doctor has sort of wound down if you will but I think there's significant value in creating that doctor physician relationship longitudinally over a period of time and then supplementing them with information at the point of care either through electronic medical record or you know there's advances in artificial intelligence and big data where the machine learning algorithm can curate that information for the patient and the provider and present it to them appropriate time.
I think that's a really great story because I've noticed that you know to Darryl's point, earlier he mentioned Benefit Value Advisor where people call in and get help. A lot of that depends upon the member being altruistic saying you know I'm going to exceed my deductible, but I might could have some help in picking a better, more efficient health care service and that benefits my employer not necessarily benefit me, but we've seen members do that and I think by and large most physicians make those decisions too. They try to make the best decision.. But one of the things that you mentioned is this has gotten complicated lot more variables a lot more just changes in price between different services and curating the information has gotten not just more difficult for the member of the patient but also for the doctor too. The doctors don't know what an MRI cost at a hospital versus freestanding imaging center. I mean it's just gotten more complicated. So, if you couple it with information and possibly couple it with incentives for both of those parties like in value-based care programs, ACOs and things like that a lot of these issues actually go away and everybody benefits including the whole system.
Absolutely and I firmly believe that everybody wants to do the right thing. They just don't have the right information at the right time to be able to do that effectively.
So, I hear you Dr. McCoy that it's complicated. Maybe it's oversimplifying things but I'm just wondering what if doctors were just to post a list of the prices that they offer. This is how much an annual screening cost, this is how much an x ray costs, this is how much something else costs, you know is that is that oversimplifying things?
I don't think.. I think from the physician perspective I think there's nothing wrong with that and I've always felt like that if you go into an office or if you go into the grocery store you ought to be able to find out what something cost in the system is not overly complicated that you couldn't give somebody a range or an estimate of what would something cost. I think what ViJay is saying and I tend to agree with is that it's more complicated than that. It is there's other issues that play a role and although at times it may look like you know patient says I want the cheapest option and you look at him and go “Well, no the cancer that you have needs the more expensive option” right? So, it's not it's not as easy. You need someone to help kind of curate that
That's where the quality comes in.
I love the word asymmetry because there's just a disconnect on that and somebody has to help navigate that I think this conversation today though has been really good around this topic which is complicated and evolving and a lot of good information is coming up in the future that I think is really going to help everyone. So, I want to thank you both for being here today. Thanks for joining us for this edition of Blue Promise.
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