Paying patients to use lower-priced providers

Area of Science:

• Health Economics
• Healthcare Management
• Health Services Research

Background:

• Employers are implementing financial rewards programs to encourage employees to use lower-priced healthcare providers.
• These programs aim to manage healthcare costs through benefit design and patient financial incentives.

Purpose of the Study:

• To evaluate the impact of employer-sponsored financial incentive programs on healthcare procedure prices.
• To assess how these programs influence patient choice of provider, considering exposure length and patient demographics.

Main Methods:

• Utilized a difference-in-difference analysis comparing employers with and without rewards programs.
• Analyzed claims data from 3.9 million health plan enrollees across 87 employers.

Main Results:

• Program introduction correlated with a 1.3% price reduction in year one and 3.7% in year two.
• Significant price reductions (3.7% and 6.5%) and engagement were observed for magnetic resonance imaging (MRI) services.
• No differential impacts were found based on consumer-directed health plans or market price variation; utilization remained unchanged.

Conclusions:

• Financial incentives for selecting lower-priced providers are associated with modest healthcare price reductions.
• Savings are primarily concentrated in specific services, such as MRI, indicating targeted effectiveness.