On January 24, Vanessa Fuhrmans wrote a story in the Wall Street Journal about insurers paying doctors to prescribe generic drugs, rather than name-brand drugs for their patients.   According to the story, Doctors Paid to Prescribe Generic Pills, the basic idea is to reduce health care costs for patients, employers and insurers by implementing an incentive program set up by health insurers to reward physicians for prescribing generic drug prescriptions instead of the more expensive, brand-name drugs.

I think this approach to reducing health care costs is wrong.  Consumers --not the providers are the ones that should be recipients of incentives by asking for generic rather than brand-name drugs.  If consumers can directly benefit by becoming cost-conscious, consumers will be motivated to ask for discounts, request generic prescriptions, and shop around for the best value in order to save money.  In fact, this type of behavior already exists with consumers that have high-deductible health plans.  Do you think a consumer that is responsible for paying $2000-$5000 out-of-pocket would choose to pay $230 for a brand-name prescription when he can save $170 and pay only $60 for a generic drug?  This already happens today just by asking your pharmacist or physician for a generic equivalent when filling a prescription.  Consumers are not rewarded by insurance plans for this cost-conscious behavior, but they do save money by shopping around for good deals.   Insurers and health care industry experts underestimate the intelligence and responsibility of consumers.  In every other industry, consumers are self-motivated to shop for the best value.  The same motivation would occur in health care if consumers were paying out-of-pocket for these services.  I’d like to see health plans reward consumers for making cost-effective choices by offering premium discounts to reward this good behavior.  Automobile insurance policies reward consumers with discounts for good driving records, anti-theft features on your car, vehicle safety, accident free, and new student drivers with good grades in high school. 

Mona

If you are one of the many consumers out there shopping around for an MRI because you have a high deductible plan and you are trying to manage your out-of-pocket costs --you are not alone.  How much will an MRI cost you?   Interestingly, prices for MRIs can range from $600 - $3500.  See for yourself, use OutofPocket.com to find out what other consumers have paid for an MRI.  Why the huge price difference for the same test?  Isn’t an MRI an MRI?  What’s the difference between a $600 MRI and a $3500 MRI besides $2900?  Personally, I’d much rather save the $2900 for summer vacation and find a trusted provider that offers me the best quality at the lowest price for the MRI.

If you live in the Milwaukee, Wisconsin area and need an MRI, you need to know about SmartChoiceMRI.com.  This independent outpatient MRI facility charges $600 for all MRIs, for every insurance plan.  They negotiated this rate with the 50+ insurance plans they accept.  How did they do this when all the other providers have “secret” negotiated pricing with insurance plans that can include sometimes up to 100 different prices for the same provider for the exact same service – but for different insurance plans?   I’d like to see more pricing models like www.smartchoice.com in the future.  It makes it so much easier for the consumer to compare costs, easier to budget, and makes the consumer feel like they are not being overcharged for the MRI.   

Results of this pricing model: 

• encourages competition
• creates more consumer-choices
• drives down prices, improves services
• encourages innovation
• increases patient care and improves the quality of care

This is a model we would like the health care industry to strive for!

Mona