Sharing Savings with Members: Financial Incentives Legislation Coming to Your State

While price transparency continues to be a topic of focus for federal and state mandates, several states have also passed legislation to drive health plans to share savings on care with their members through ‘right to shop’ programs. ‘Right to shop’ legislation supports financial incentives for health plan members when they use lower cost providers and health services. In most cases, this requires plans share a percentage of claims savings with their members as cash payment, or to offset deductibles or co-pays.

Right to Shop Programs

These programs started cropping up in 2015 when the State of New Hampshire established a shared savings program for its employees. This type of ‘right to shop’ legislation has been gaining momentum with some states establishing programs to benefit their public employees, as well as with states looking to have plans offer incentives more widely.

  • Kentucky, New Hampshire and Utah have Right to Shop for their state employees’ health plan coverage. Utah’s program, established in 2018, encourages private plans establish these programs to reduce claims expenses by sharing savings with employer groups in the large or small group market through premium discounts.
  • In the case of Florida, Maine, Nebraska, Tennessee and Virginia, private health plans are encouraged or required to share savings with their commercial plan members. Virginia is the latest mandate, requiring health plans in the small group market to share savings of $25 or more with members starting in 2021. These services often include physical and occupational therapy, radiology and imaging, labs, and infusion therapy.
  • Other states have also proposed legislation around similar shoppable services, including Alaska, Illinois, Louisiana, Massachusetts, Minnesota, Oklahoma and South Carolina. Most of these require plans to share a percentage of savings, anywhere between 25-50% with members.

Why Right to Shop?

The drive to share savings through these incentives is one of many efforts to curb rising health care costs. It directly addresses the current situation of health care price variation. Health care service pricing can vary widely. For example, one report by the National Bureau of Economic Research found a hospital-based lower-limb MRI scan would cost an average of $1,474.35, while non-hospital-based lower-limb MRIs were, on average, $642.82. Given that people are increasingly covered by high-deductible health plans (HDHPs), the value of these programs is evident. In addition, our consumer research shows that more than 2/3 of health plan members want more control over their health care costs. Sadly, many people don’t even know how to find cost-effective care options, or even that they can choose their provider.

Will Plans and Members See Savings?

These kinds of financial incentives programs have shown results in multiple ways:

  • Claims savings. The State of New Hampshire public employee program claimed millions in savings from their program. HealthSparq works with health plans around the country for their voluntary financial incentives shared savings programs for fully-insured and self-insured members with HealthSparq Rewards. One health plan on the east coast is seeing an average of $850 in savings per procedure.
  • Return on investment. The New Hampshire program has shared positive ROI data in the past. And a HealthSparq plan client in the mid-west is seeing 2.5x ROI since rolling it out this voluntary program to their fully-insured book of business.
  • Member engagement. Incentivizing health plan members around saving on health care procedures and services is turning passive consumers into active savers. Plans are seeing members return and compare the cost of services at twice the rate of other members.
  • Closing care gaps. HealthSparq plan clients are seeing that members are more likely to shop around for covered preventative services, such as colonoscopies and mammograms, even though they aren’t experiencing the out-of-pocket cost savings of the service. This can save plans long-term health care costs by catching health issues, like cancer, earlier.

The legislative momentum for ‘right to shop’ programs makes sense given the clear financial benefits to plans, groups and consumers. The value of delivering a program like HealthSparq Rewards that is simple for members and boosts engagement while creating loyalty in the process. Are you ready to share savings with your members?