Ghertner

As retailers shift marketing budgets from paper to digital, more consumers are getting coupons and discounts on their computers and mobile devices.

It’s increasingly common for shoppers to redeem a deal by scanning their cell phone at the cash register or clicking on an email to take advantage of a flash sale on airline tickets.

But what if your insurance company texted you about that colonoscopy you’ve been needing since you turned 40, and told you they’d waive your copay if you clicked to accept the deal?

What if Aetna emailed you about a 30 percent discount on your diabetes medication? Would you click to save?

Some local startups are betting consumers will shop for health services the same way they do for a vacation deals, or a pair of shoes.

They’re part of a new movement toward more transparency in health-care pricing by pulling back the veil on how much health-care goods and services like Lipitor, elective surgery and artificial hips cost, and nudging people to save money on the ones they use.

And with American consumers paying more out-of-pocket health care costs than ever before, they just might be right.

“The focus is on, “How do you help people make more informed purchasing decisions regarding their health care?” says Doug Ghertner, CEO of Brentwood-based Change Healthcare, of the pricing tools his company develops for consumers. “What we do is ‘shop’ on your behalf.”

The trend toward HDHPs

For most of modern history, health care costs have long been a closely-guarded secret only revealed to pay-as-you-go or uninsured consumers when they received their hospital bills.

And for a long time, the average consumer didn’t need to know how much his gallbladder operation actually cost.

His employer-provided insurance would simply pay the bill, and the only thing the consumer would pay was his out of pocket cost – the office visit co-pay, deductible and any coinsurance (percentage of cost after deductible is met).

That’s changing as more Americans buy their own health policy either due to unemployment or self-employment, or are shifted into high-deductible health plans (HDHPs) in which they must pay thousands of dollars before insurance kicks in, creating an incentive to shop around on price.

More employers are moving their employees into HDHPs as they seek to control their health care spend.

Nationwide, HDHP enrollment is growing by about 15 percent annually, with enrollment going from about 11.4 million people in January 2011 to 15.5 million people in January 2013, according to the trade group America’s Health Insurance Plans.

And more employers are moving in that direction: 17 percent of employers (including Michelin North America) currently offer HDHPs as the only health plan option for employers, and 44 percent of the country’s largest employers are considering such a policy in 2014.

Brentwood firms offer help

Shifting costs to workers may be good for employers’ bottom lines, but it can mean trouble for consumers who must meet those high deductibles.

Those who can’t afford to shell out $5,000 may delay getting care or simply not pay their medical bills, forcing hospitals to absorb the cost.

Transparency advocates say that’s where their tools can help.

Companies like Change Healthcare and Healthcare Blue Book, also of Brentwood, develop consumer-friendly interfaces powered by a database containing costs of common medical services such as office visits and inpatient and outpatient procedures, typically provided by health insurance companies.

Consumers can then use the tools to compare prices at different providers, and find out what their actual out-of-pocket cost will be, based on their plan-specific benefits.

Change Healthcare’s Transparency Messenger platform also has a “push” feature that scans its database for potential cost savings based on the consumer’s utilization of common and recurring services like chiropractic care, physical therapy or maintenance medications that a user might purchase several times in a benefit year.

When it finds an opportunity to save money on a commonly used service, it sends the user a message.

Ghertner

About 60 percent of users do click and act on those messages.

That high engagement rate impresses clients such as Blue Cross Blue Shield of Minnesota, which rebrands the tool for its members under the name SmartSelect.

The number of people with access to Transparency Messenger vaulted from “a couple hundred thousand” at the end of 2012 to “well into the millions” this year, Ghertner says.

“What we’ve seen is, very few people take the initiative to seek out cost info in health care,” Ghertner adds.

“You can have the greatest cost transparency tool in the world, but if no one uses it, it doesn’t drive any value. Engagement is the key.”

A fair price – ask first

For the uninsured and those who buy their own insurance, Healthcare Blue Book offers a smartphone app free for download.

The Healthcare Blue Book app is powered by a database of prices for common medical procedures, based on the actual amount that health insurers reimburse hospitals.

That’s often a much different number than the “retail price” that hospitals will quote a patient without health insurance.

Knowing what health insurers have negotiated with hospitals gives consumers power to ask for a fair price, says Healthcare Blue Book co-founder Bill Kampine, a veteran of Nashville startups CareSteps and Healthways.

“You have to ask before the service,” Kampine says.

“Many providers will work with patients on an upfront price before the service, but it’s a lot more difficult to negotiate afterward.”

Along with the free consumer tools, Healthcare Blue Book also powers customized transparency tools for health insurers and large employers who pay their employees’ health care costs.

Investors take notice

Change Healthcare and Healthcare Blue Book aren’t the only services in this space; competitors such as San Francisco- based Castlight Health also develop services based on cost transparency.

And investors are onto the trend.

In August, Change Healthcare got a $15 million infusion of capital from investors – among them, Blue Cross Blue Shield Venture Partners, the investment arm of the Blue Cross Blue Shield Association.

It’s a small piece of the $400 million that has poured into companies working on health care transparency initiatives since 2010, including a $160 million investment in Castlight Health alone, according to research firm CB Insights.

Most major health insurance companies are now offering some kind of transparency tool, often via smartphone apps that can send health tips, wellness incentives, appointment reminders and doctor finding services to their members.

For insurers, the value in these comparison tools lies in the ability to nudge members toward doctors and hospitals who provide a quality service for a lower cost, thus reducing the insurer’s reimbursement costs and making it more likely that members will get the care they need and stay on their medications.

Over the long run, it could move the needle on health care costs.

Check database for costs

Earlier this year, the federal government published a database of charges for 100 frequently billed medical services such as gallbladder removal and hip replacement at more than 3,000 hospitals nationwide.

It shows what hospitals charged Medicare for the procedures in 2011, as well as what they actually received back from Medicare.

The data show pricing variations between hospitals that are sometimes extreme, even between facilities within the same city.

For example, Centennial Medical Center charged Medicare $898.47, on average, for a Level 1 diagnostic and screening ultrasound. Baptist Hospital (now known as Saint Thomas Midtown), charged $389.99 for the same service.

Both hospitals were actually reimbursed less than $60 for the service.

On imaging services, the two hospitals were closer. Centennial charged Medicare, on average, $3,971.15 for an MRI in 2011 and was reimbursed an average $322.11, while Baptist charged $3,475.54 and was reimbursed $354.85 for the same service.

The database only shows Medicare prices and reimbursements, not the prices negotiated with private health insurers such as Aetna and Blue Cross Blue Shield – a more valid comparison for the under-65 set.

Still, it was a big step toward showing the true cost of health care.

Kampine, of Healthcare Blue Book, says he believes that with the trend toward higher deductible plans, health care providers will come to welcome transparency – especially if the choice is between accepting a lower price for services or having patients default on their bills.

That’s where his company comes in. And as more consumers get used to paying bills and managing personal services like banking and insurance through apps on their smartphones, the market for transparency tools is likely to grow, too.