Under a new Maine law, health insurers must compensate customers who find a better deal on many common medical services.
Customers will be rewarded for shopping around for less expensive CT scans, lab work and other care by keeping a share of any savings they realize.
Here’s an example of how it will work: A hypothetical Lewiston patient is experiencing knee pain so her doctor orders an MRI of her leg. That service costs $981 on average in Maine. But she decides to use a shopping tool her insurer must offer under the new law, and finds the same scan is available in nearby Auburn at a price of $417.
By choosing the Auburn provider, she and her health plan save $564. They split the savings, and her insurer compensates her $282.
A few important specifics on the law, sponsored by Sen. Rod Whittemore, R-Skowhegan:
The incentive for shopping around applies to only some consumers. That part of the law affects consumers in the “small group” market, or those who get health insurance through a small business where they work. Those consumers must also have a plan that offers a health savings account. All told, the provision will affect about half of all small group policyholders in Maine, or about 33,000 consumers, when it kicks in on Jan. 1, 2019.
It does not apply to plans sold through the Obamacare marketplace, due to concerns about how the incentive payments could affect income-based subsidies that help people afford that coverage. The law’s drafters hope to see the provision expanded to employees of large businesses in the future.
Another provision affects anyone with private health insurance. It requires health providers upon making a referral to inform patients that they have the right to get that service from another provider and that they may review a health care price comparison tool offered by their insurer.
Insurers have leeway in how they compensate customers. The bill originally stated that insurers must split any savings 50-50 with their policyholders and pay out the incentive in cash or apply it against their deductibles. But the final law stipulates no percentage of savings that the insurer must pay, or the form of that payment. Some possibilities are gift cards, lowering monthly premiums, or credit toward out-of-pocket costs such as co-pays.
Four categories of care are considered “shoppable.” They are physical and occupational therapy, radiology and imaging, laboratory services and infusion therapy. Insurers could conceivably also add other non-emergency outpatient services to their incentive programs, but the law requires only these four.
Rewarding consumers for seeking out better value in health care benefits not only them, but also insurers, and will ultimately spur competition among health providers who charge widely varying prices for the same services, supporters of the law say.
Brad Stout, president at Coutts Brothers Inc., an electrical construction and maintenance company in Randolph, told lawmakers that his employees have the right to know how much they’re paying for medical care.
“I provide estimates to my customers and I don’t even have a college degree,” he said in his testimony. “I would like to think the group of people I trust with the welfare of my children can do the simple math that goes along with a simple cost estimate.”
Critics contend that cheaper services aren’t always of good quality, and that the law throws a wrench into the relationships insurance companies have built with provider networks to negotiate lower prices for their customers.
Insurers opposed the law, as did the Maine Hospital Association. A MaineHealth representative testified that even if providers lower prices on their shoppable services to compete, they may increase prices for other services, such as trauma care. The services that qualify for incentives also aren’t the ones driving health care costs — heart disease, trauma-related disorders, cancer, mental disorders, and COPD/asthma, Colin McHugh testified on behalf on MaineHealth.
“These programs have had little or no impact on the total cost of care, and it strikes me that these programs have done little to transform health care,” he said.