Shifting buying power to workers [Indianapolis Business Journal (IN)]

For the past decade, employers have been tinkering with their health insurance plans to shift greater costs and decision-making onto their workers. Their hope has been that if workers had more skin in the game, they would be more frugal with their spending on health care.

But it hasn't made much difference, as health care costs continue to rise faster than inflation. It remains exceedingly difficult for consumers to obtain accurate cost and quality information about the services doctors and hospitals provide before deciding whether to buy them.

But now 10 of Indiana's largest employers - including the state of Indiana; Cummins Inc.; CNO Financial Group Inc.; Indiana, Purdue and Butler universities; and Indiana University Health - think they have hit upon a solution.

They all have embraced a new software tool created by San Francisco-based Castlight Health

Inc. that offers their employees accurate and understandable cost and quality information - and does so before workers schedule an appointment or book a surgery.

Castlight's tool, while unproven, at least has potential to transform the local health care marketplace by finally allowing patients to shop around for low-cost, high-quality providers. If that happens, it could force medical providers to lower prices in response to pressure from consumers and employers.

Sheri Alexander, a benefits broker at Gregory & Appel Insurance in Indianapolis, said the Castlight tool and its wide adoption in Indiana could be a "game changer" for the health care market here.

"You need transparency; that's the missing piece," Alexander said. "They're going to have so much information in Indiana that the database is going to be really meaningful here."

Castlight first turned its attention to Indiana two years ago when it was contacted by Columbus-based engine maker Cummins. After a presentation in late 2011 to the Employers' Forum of Indiana, a group of large Indiana employers, health systems and health insurers, inquiries started rolling in.

"It just caught fire. There were so many employers that were so excited about the potential of this," said Peter Isaacson, chief marketing officer at Castlight.

When all 10 Hoosier employers get Castlight up and running, it will be available to 110,000 Hoosiers covered under their health plans. Other employers signing up include Ivy Tech Community College, OneAmerica Financial Partners Inc. and Indianapolis-based trucking firm Celadon Group Inc.

Indianapolis-based health insurer Anthem Blue Cross and Blue Shield of Indiana has been helping some of its clients, such as IU, get their claims information into Castlight's system, so the prices displayed to employees can reflect the discounts Anthem has negotiated with doctors and hospitals - and even so it can show an employee's actual out-of-pocket cost.

"I'm not surprised that it's caught on in our market, just simply by the fact that all of our employers are struggling with overall health care costs," said Rick Rhodes, Anthem's regional vice president of sales. "We're entering into a marketplace where consumers need more information to make informed decisions."

Purdue goes first

The first employer to start using Castlight's service was Purdue in <location value="LU/us.in.westte" idsrc="xmltag.org">West Lafayette, which rolled it out to its 12,000 employees and 15,000 dependents in July.

Purdue officials said they wanted to help their health plan members see that the prices charged by doctors and hospitals for identical services can vary wildly - without any correlation to quality.

"There is a lot of cost difference between our providers, especially in our area, for the same exact procedures," said Eva Nodine, Purdue's benefits manager. "Cigna, who was our [insurance] carrier, could not provide us with the information to show our employees."

So Purdue contracted with Castlight, which loaded all of Purdue's medical claims data from Cigna into its software program, which identifies common bundles of procedures and the prices paid for them in the past via Cigna's contracts with medical providers.

For example, when a patient sees a doctor for a sore throat, the most common charges billed to an insurance plan are for the office visit and for a strep test. So when Purdue's workers use Castlight to search for doctors who can treat a sore throat, the software shows them a bundled price for both the office visit and the strep test.

"When they actually get in and check the prices, they're surprised at the differences. It's really opening people's eyes," Nodine said. "The reason that's important is, our costs obviously keep rising. We're having to continue to shift our costs to our employees, and we don't want to do that."

Indeed, the Purdue trustees set a goal two years ago of reducing the percentage of the overall health expense the university pays, from 87 percent to 80 percent. That means employees are shouldering more.

Price, quality focus

Key to Castlight's software is its inclusion of both price and quality information.

For example, if a patient searches for surgery centers that do heart bypass procedures, Castlight's software displays a graph showing how each surgery facility scores based on outcomes data collected by the federal Medicare program.

Or, if a patient looks for a primary care doctor, Castlight's software will display patient satisfaction scores for that doctor, taken from websites like Vitals.com.

Castlight also draws and displays quality information from numerous other sources, including state hospital discharge databases, the National Committee for Quality Assurance and Leap-frog, a hospital rating service operated by large national employers, as well as regional quality programs such as the Quality Health First program run by the Employers Forum.

"Employees are notoriously indifferent to disease management initiatives and wellness. Just the ability to engage employees has been really, really difficult," said Isaacson, Castlight's chief marketing officer.

But by creating a software tool that's as easy to use as Google, Amazon or Expedia, Castlight thinks it can get much higher levels of employee involvement than most health insurance programs in the past.

Castlight, formed in 2008, has 47 employer customers around the country including the 10 in Indiana. The 200-person company has raised $181 million in venture capital.

Castlight officials acknowledge that doctors and hospitals might be leery of their service. But they pointed out that IU Health, the largest hospital system in Indiana, has signed on to use Castlight, not only to control spending by its own employees but also to help its own doctors figure out how to direct patients to the most cost-efficient care.

That latter use could become increasingly important as the federal government and. private health insurers push hospitals and doctors into new contracts that reward them for keeping patients well and punish them for care that rises in cost every year.

One of many

Castlight's efforts are hardly the first to provide cost and quality information to health care consumers. All large health insurers have been doing the same for at least five years. Moreover, customer-focused Web services, such as Vitals.com, RateMDs.com, Healthcare Blue Book, OKCopay Inc. and even Indianapolis-based Angie's List also have tried to give consumers information on the cost and quality of medical providers.

It remains to be seen if Castlight proves more successful than those services at changing how Americans interact with medical providers.

"It makes enough information available in a format that patients can navigate and it's actionable. And that has huge value," Dan Rives, associate vice president of human resources at Indiana University, said of Castlight. Noting that 68 percent of IU's health plan members are on a high-deductible health plan with a health savings account, he added, "If we're going to ask them to be better consumers, we have to give them information that's actionable."

The university has worked with its health insurance company, Anthem, and its pharmacy benefit manager, Medco Health Solutions, to provide price information about both medical services and prescription drug costs. Most other Castlight customers are doing the same.

Many trends are pushing more and more decision-making responsibilities onto health care consumers. Already, 15 percent of Americans with private health insurance have a high-deductible health plan that requires them to pay the full charge of medical bills, either out of their pockets or out of a health savings account or a health reimbursement arrangement. And that number grows each year.

Also, President Obama's 2010 health reform law will have more Americans shopping in online exchanges for health insurance coverage. And it's likely they will gravitate toward plans with lower premiums but higher deductibles, which will expose even more people to the full prices of medical services.

Employers are also moving toward using private health insurance exchanges - which allow each employee to choose a health plan from a broad menu of choices. And in response, health insurers and hospital systems are developing new kinds of health plans that may include only low-cost, high-quality medical providers.

The combination of consumers using cost and quality information to choose health plans, doctors and hospitals is what Alexander, the benefits broker, thinks will really alter the health care marketplace.

"If that happens, that will be the game changer," she said.