Embracing retail in
Overview healthcare — from
cost transparency
The need
Optima Health wanted to deliver the most accurate out-of-pocket cost to provider rate
estimates possible for its members — in a way that made shopping for
healthcare services easy restructuring
The solution
The leaders of Optima Health, an integrated health
The health plan implemented the IBM Treatment Cost Calculator, which
plan in operation for 32 years and a service of
mines claims data sets to provide personalized cost transparency, and
Sentara Healthcare, understood the importance of
can handle complex benefits plan and payment structures
providing clear and personalized consumer-focused
information.
The benefit
The Treatment Cost Calculator allows Optima Health members to search That understanding was being driven by wide
for treatments, physicians or facilities for cost estimates, and the plan variations in care and treatment pricing1, reform
expects increased member satisfaction and a competitive advantage legislation dictating new mandates on transparency2
as a result and a desire to improve the member experience.
Goal: A shoppable healthcare Estimates in the solution are comprehensive. For
experience for members example, when looking up the cost of a provider HFMA Guiding Principles
office visit, members can review costs of common
Optima Health leaders wanted to act quickly services often included in a typical visit, such as lab for Transparency3
to provide price transparency and a shoppable work and immunizations. –– Should empower patients and other care
experience for their members. The plan serves purchasers to make meaningful price
over 480,000 members, including those from Next: Implementation strategy and comparisons prior to receiving care
commercial, Medicaid and exchange plans, rate restructuring –– Any form of price transparency should be
primarily in Virginia. easy to use and easy to communicate to
As the health plan began to structure its member stakeholders
The main objective was to deliver the most accurate plans around price transparency and launch –– Should be paired with other information
member out-of-pocket cost estimates possible, the calculator for its members, the organization that defines the value of services for the
through an easy-to-use, web-based interface. embraced the Guiding Principles for Transparency care purchaser
Restructuring the plan’s provider rates was another developed by the Healthcare Financial Management –– Should ultimately provide patients with
important objective toward providing its members Association (HFMA)3. the information they need to understand
with simple and accurate estimates. the total price of their care and what is
The Treatment Cost Calculator helped the health included in that price
Foundation: Claims data plan check off many of the guiding principles, –– Will require the commitment and active
including ease of use. For instance, the solution participation of all stakeholders
Optima Health chose to implement the Treatment shows the overall out-of-pocket estimate,
Cost Calculator allows consumers to view side-by-side provider
comparisons sorted by lowest price, and delivers a
The tool’s foundation is the mining of large paid near real-time feed for each member’s deductibles
claims data sets from Optima Health, as well as and health savings account balances.
from the proprietary IBM MarketScan® Database,
one of the largest claims databases in the industry, In addition, the Treatment Cost Calculator has the
with data from the claims experience of more than flexibility to accommodate both complex benefits
300 employers with 25 million covered lives. The plans and multifaceted payment structures.
calculator uses 18 months of claims data to create
cost estimates through advanced algorithms, event
grouper methodologies and more.
IBM Watson Health 2
To ensure organizational confidence in the Satisfied health plan,
calculator’s accuracy, the Optima Health internal satisfied members What is the
medical economics team, made up of data The Treatment Cost Calculator at Optima Health
analytics experts, reviewed the tool’s algorithms now allows members to search for treatments,
Treatment Cost Calculator?
and methodologies and put a selection of the physicians or hospitals on both desktop and mobile This consumer price transparency tool helps
calculator’s cost bundles through an in-house devices, and the health plan has reported that the consumers manage their healthcare costs,
validation process. interface is both intuitive and responsive. objectively evaluate treatment alternatives
and find savings by comparing providers
Rate structuring also began to take a front seat Optima Health expects that the implementation of and facilities.
during the tool’s implementation. The health plan Treatment Cost Calculator will increase member
encouraged network providers to simplify their satisfaction over time, which stands to improve the The Treatment Cost Calculator is part of a
wide-ranging rate structures for several shoppable plan’s competitive position in the marketplace. collection of resources, including the IBM
services, such as outpatient imaging, other myBenefitsMentorTM web-enabled enrollment
outpatient diagnostic services and outpatient The plan is also tracking member utilization in the support tool, that helps people move from
surgeries. tool to learn more about its population — such as passive participants to active healthcare
percentage of members using the solution, types consumers.
The new structures allowed for the use of case of estimates members are searching for and when,
rates. The simplification benefited the providers, how high-deductible plan members are using the
too, as consumers may be more likely to move tool compared to others, how estimates compare
their business to lower-cost providers if there is no back to actual claims data, and typical timeframes
perceived difference in quality. between an estimate search and an actual claim.
When Optima Health implemented the Treatment Optima Health is also phasing quality measures into
Cost Calculator, estimates for 350 services were its Treatment Cost Calculator.
available. Watson Health and Optima Health have
since collaborated to expand the list to nearly
440 service estimates, and more are planned in
the future.
For more information
Email: [email protected]
IBM Watson Health 3
Solution components
IBM Treatment Cost Calculator
Connect with us
Notes
1
The Price Ain’t Right? Hospital Prices and Health Spending on the 2
Report Card on State Price Transparency Laws. Health Care Incentives
Improvement Institute (HCI3) – Catalyst for Payment Reform (CPR), July
About IBM Watson Health
Privately Insured. Zack Cooper (Yale University), Stuart Craig (University
of Pennsylvania), Martin Gaynor (Carnegie Mellon University, University 2016. Accessed at http://www.hci3.org/wp-content/uploads/2016/07/ Each day, professionals throughout the health ecosystem
of Bristol and NBER), and John Van Reenen (Centre for Economic reportcard2016.pdf.
Performance, LSE and NBER), December 2015. Accessed at http://
make powerful progress toward a healthier future. At IBM
3
Healthcare Financial Management Association, March 10, 2015.
www.healthcarepricingproject.org/sites/default/files/pricing_variation_
Accessed at http://www.hfma.org/content.aspx?id=28796.
Watson Health, we help them remove obstacles, optimize
manuscript_0.pdf.
efforts and reveal new insights to support the people they
98016098USEN-00 PAY 18354 0518 serve. Working across the landscape, from payers and
providers to governments and life sciences, we bring together
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