AG Says Cost Tools, Payment Models Have Limitations

Attorney General Maura Healey will present a report at this week’s Health Policy Commission cost trends hearing showing that policymakers and the public should curb their expectations about driving down costs through the use of online price transparency tools and provider-insurer alternative payment models.
The AG’s report shows that while the state is meeting its healthcare cost growth benchmark, consumer costs – through rising premiums, and high-deductible insurance plans – continue to rise. Policymakers have created incentives to shift consumers to high-value, lower-cost providers, promoting insurers’ online cost estimator tools and alternative payment models where providers are given financial rewards to provide cost-effective care. But the report shows both incentives aren’t working as expected.
First, a small percentage of people seeking care don’t use the price transparency tools, and those that employ them don’t hold their providers to the estimates they were given, according to the report. The AG’s office also found that “Payers have tried different strategies to encourage use of the Cost Estimators, although most payers do not track whether members who use the tools are more likely to select higher-value health care options.”
As for the alternative payment models, such initiatives depend on closely tracking a patient’s care over a period of time. But the AG found that patients switch insurers and products frequently, meaning that providers can’t measure their own performance under the payment models, thereby rendering them ineffective. The AG also found that “[t]he methods payers use to assign (‘attribute’) patients with PPO plans to providers for the purpose of Alternative Payment Arrangements is complex and may serve as a barrier to incenting providers to effectively manage and care for their patient population.”
The report recommends that the healthcare system “manage expectations” about current price transparency tools being able to lower costs, while also working to improve the tools. The AG’s report also says: “Recognize that healthcare provider financial incentives to manage their patient populations are significantly hampered by the frequency with which patients switch health plans,” and “Standardize the methods used to assign patients to healthcare providers under alternative payment arrangements.”