WellPoint program lets employers name their price for doctors

Physicians collecting from WellPoint-insured patients who haven’t met their deductible or have a co-pay might have one more reason to send them a bill — to collect the difference between the price the insurer has negotiated with the doctor, and what the employer is willing to pay.

WellPoint plans to launch a program in 2014 in which self-insured companies can determine what they will pay for certain procedures. WellPoint would present a price range to the employer based on what has been negotiated with doctors. Then the company would determine the maximum price it’s willing to pay.

Patients insured through a participating employer would have access to a website that shows, in as much detail as possible, physician price and quality information, including what they would expect to pay out of pocket. Physicians would still be able to charge based on the rate WellPoint negotiated, but any difference between that rate and what a company is willing to pay would have to be collected from the patient, not the insurer.

WellPoint has worked with the grocery chain Kroger and the California Public Employees’ Retirement System on similar programs that began about two years ago, but there was no major Web component.

Companies examine cost distributions for procedure midpoints to determine reference prices, said George Lenko, program director of national networks for WellPoint. So, for instance, hip surgery can range between $20,000 and $100,000. In that case, an employer may set what’s called a reference price at any point in between, Lenko said. If a physician’s contract with WellPoint calls for less than that amount, the doctor would be paid at that previously negotiated rate. But if a doctor’s negotiated charge was higher than the desired price, he or she would have to bill the remainder to the patient and potentially face patients going to lower-cost physicians.

Doctors will be able to check their price comparisons and quality metrics if they so choose, Lenko said.

Spotlight on variance in price

The issue of costs varying by doctor has received more attention in recent times, with policymakers influenced by research from the Dartmouth Atlas Project finding wide ranges in Medicare charges that could not be explained by regional differences in cost and income or by severity of illness. The project is conducting similar research into private insurance costs.

Others, such as authors of a May 28 study in Medical Care Research and Review who found disease burdens specific to particular areas play a large part in Medicare cost variances, have cautioned that perceived pricing inefficiencies can’t necessarily be reduced without harming patient care. Meanwhile, the American Medical Association weighed in with a comment letter on a House plan to implement efficiency measures to reduce geographic spending variations as part of a framework to replace the sustainable growth rate formula. The Association said managing care at the lowest cost and managing it cost-effectively are not always the same thing. Comparing episodes of care, rather than per-capita costs, would work better, the AMA said. However, it doubts whether such comparisons “will ever be appropriate for all physicians.” The AMA is developing tools to measure episode costs.

WellPoint said its initiative was motivated by a greater desire for employers and members to get more transparency in their health costs. Various public and private efforts have sought to divulge price information, including the Centers for Medicare & Medicaid Services’ release of hospital charges for certain inpatient and outpatient procedures. Discussion has begun on whether CMS eventually will release physician charges, as well.

Reference-based benefits are becoming popular as it becomes easier to compare costs for the same service, Lenko said.

He said when employees know how much services cost, and they are sharing in that cost, they become more engaged with their health care. “The patient becomes a better consumer,” Lenko said. “The more they shop for their own health care, the more efficient they will be.”

WellPoint is working with employers on setting up this program, he said. WellPoint partnered with Castlight Health, a San Francisco company that specializes in health care price comparisons, to add the online component.