Study: Insurers, employers saving millions by paying members to visit low-cost providers

Pile of money
Cash reward programs are being tested as a way to steer patients toward lower-price providers. (Getty/urfinguss)

Employers and payers are piloting programs that offer people monetary incentives for switching to lower-priced providers—and seeing significant savings as a result.

In a recent evaluation of such rewards programs published in Health Affairs, researchers found a 2.1% reduction in medical pricing, a savings of $2.3 million annually for services targeted by the rewards program.

According to the collected data, the biggest rewards—and therefore, savings—were seen in MRI and ultrasound expenses, with no real cost savings among surgical procedures.

“What came as a surprise was that nearly all of these payments come from imaging services,” Christopher M. Whaley, lead author and an associate policy researcher at the RAND Corporation, told FierceHealthcare. 

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In 2017, Health Care Service Corporation introduced a program called Member Rewards, which was designed by Vitals SmartShopper and built upon an existing price support tool. The rewards program, which sent the patient between $25 and $500 based on a specific provider, was available for 135 elective services. To be eligible for the program, patients had to call the rewards advice line or use the price transparency tool before receiving care. 

The Health Affairs study reported that in the first 12 months after the program was introduced, 8.2% of patients in the intervention population used a price shopping support tool, compared to 1.4% of the noneligible population. And 23.2% of patients who used the price shopping support tool received a reward payment for going to a lower-priced provider. 

The highest engagement was for MRI’s, 31% of which were associated with a reward. Overall, the average reward payment was $114, going as low as $41 for an ultrasound and as high as $408 for a major surgical procedure. 

Whaley noted that in the first year, the program had 29 employers and it is currently up to 850. However, there are still potential barriers, especially for consumers. 

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“One potential barrier with this program and others like it is that it might be just one extra thing for patients to do,” Whaley said. “It’s hard enough to choose a doctor and find an appointment time, and now you’re worrying about comparing one MRI that might get you a $75 reward versus an $85 one.”

While the results were tangible, Whaley noted that payers and providers still need to look realistically at the big picture. These types of programs can work and save money on healthcare expenses overall, but only as it relates to certain services. It will be up to payers and providers to look at the data and decide which services would be most beneficial for offering these cash reward incentives, he said.