Direct contract pricing improves transparency and also helps eliminate dramatic price variance that is the bane of high claims cost. Procedure costs can vary as much as 1,000 percent across facilities, with little to no rationale provided by many healthcare facilities.
Research shows higher costs of care don’t correlate with higher quality. In fact, higher costs are often associated with lower quality ratings.
It’s common for employees to find that their physician can perform a procedure at a different facility for a significantly lower cost. Hospitals tend to charge more for these procedures, while outpatient and independent surgery centers charge less.
Benefits programs that are structured to include tiers where the first tier is a direct-contract network give employees the freedom of choice, but also incentivize wise selection.
For example, a JAMA study showed that patients with access to pricing information opted for the lower cost services, resulting in a 14 percent reduction in lab test costs and 13 percent reduction in imaging costs.