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A Michigan health insurer is giving consumers a cash incentive to shop for medical procedures as a way to promote a healthy lifestyle — a development that experts said could help lower prices if its practice spreads.

Grand Rapids-based Priority Health is trying to prod consumers into becoming more aware of prices by giving them a reward ranging from $50 to a couple hundred dollars for choosing a less expensive option on 300 common health care procedures.

The program may raise ethical issues concerning quality and its impact on low-income consumers depending on how it is run, health care experts said.

Other state insurers including Blue Cross Blue Shield of Michigan don’t have a program like Priority’s, but the insurance industry is watching to see if there is more demand for this approach.

“Priority is leading the way on this,” said Dominick Pallone, deputy director of the Michigan Association of Health Plans, which represents most insurers in the state except the Blues.

“If that is what the employers and providers want, we’ll see more of these products developed,” Pallone said.

The practice appears to be part of a budding movement to make consumers more conscious and health providers more transparent about prices as employers and individuals shift to high-deductible insurance plans to reduce monthly premiums.

Priority Health members log in online and read educational and wellness information before getting price data on medical procedure options. Selecting a less-costly knee replacement surgery, hysterectomy or rotator cuff repair can result in a $200 Visa gift card from the health insurer — often while saving on deductibles.

The insurer has paid out more than $40,000 in rewards since launching the PriorityRewards program two months ago. Members earn $5 just for viewing the prices with a cost comparison tool at priorityhealth.com.

“We’re still sometimes on autopilot and do what our doctor says,” said Joan Budden, chief marketing officer at Priority Health. “We want (members) to be more engaged and involved in their health care.”

The program is intended to educate members about their treatment options, Budden said.

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When Bridget Bartoll, 49, of Ypsilanti needed an MRI of her knee, she found a provider on Priority’s website that charged $200 less than the hospital her doctor recommended. It would have been a $200 out-of-pocket expense, because she’d not yet met her $2,000 annual deductible.

“The (cost) at the hospital was $581 and the one that (Priority) suggested was $380 — and then the $100 reward,” Bartoll said. “I went in, got it done, and within a couple weeks I got my (Visa) card.

“It was near Labor Day and I said ‘Great!’ — all the Labor Day sales. I was happy.”

Some health insurers and providers have begun posting prices online for certain procedures, said Josh Fangmeier, senior health policy analyst for the University of Michigan’s Center for Healthcare Research and Transformation. But Priority is the first he’s heard of that uses cash incentives to entice consumers to consult price information.

“These sorts of tools are still relatively new,” Fangmeier said. “We’re all curious to see how this plays out not only for Priority, but for other companies that are rolling these tools out.”

But the program also may raise ethical concerns, said Len Fleck, a professor of philosophy and medical ethics at Michigan State University.

When the program involves significant surgery, consumers should know the skill level of the doctors and facilities and the overall quality record, he said.

“When we are talking about significant surgery — where some facilities may have more risk of infection, I’d want to know that kind of detail,” Fleck said.

The cost estimator tool, available on Priority’s website or the Priority Health mobile app, lists how much providers charge for a particular procedure. It also provides reviews and quality information. The amount the customer would owe each provider is calculated based on their own individual insurance information.

Its insured earn cash rewards for selecting a facility that offers the procedure at or below the fair market price. Fair market prices are determined by Healthcare Bluebook, an independent company that does statewide comparisons of pricing and quality on health care procedures.

When the procedure has been completed, Priority Health sends the gift card.

“Not all quality measures are equally useful and, for certain procedures like colonoscopy and arthroscopy, there can be considerable variation in price but not much variation in outcomes and quality,” UM’s Fangmeier said. “In these cases, price transparency tools have potential.”

Hospitals are becoming more transparent by posting some prices on their websites, said Laura Wotruba, spokeswoman for the Michigan Health and Hospital Association.

But the lowest-cost provider might not be the best choice for a patient with complex health conditions, Wotruba said.

“What if the patient who needs a knee replacement also has high blood pressure (and other health problems)?” she said. “Our bodies are complex, and the health care system is complex.

“The most important decision occurs between the health care provider and the patient.”

The cash incentive program also may raise ethical concerns in situations in which a $200 gift card could amount more to coercion for a cash-strapped, lower-income individual choosing doctors and facilities, Fleck said.

“It would be an ethical problem if there were more medical problems for those individuals compared with those who chose higher-priced doctors,” he said.

Paying more attention to prices is becoming more important because of high-deductible plans, when consumers often pay a deductible of hundreds of dollars or more before their insurance kicks in and absorbs more of the cost.

A recent analysis by the Kaiser Family Foundation and Health Research and Educational Trust found the average general deductible for workers whose health plan includes one grew from $584 in 2006 to $1,318 in 2015.

UM’s Fangmeier said it will take some time to see whether incentive programs lead to lower health care costs and insurance premiums.

An effort to get California’s public retirees to choose less expensive providers for certain procedures resulted in higher-priced providers reducing their prices, he noted. An analysis by the publication Health Affairs found the California Public Employees’ Retirement System saved $2.8 million in 2011.

The Colorado public retirement system has negotiated an undisclosed fixed price for knee and hip replacement surgeries for retirees under 65 who choose the option, according to Health News Colorado.

“It could (result in cost reductions) for certain types of elective procedures, like hip and knee replacements, where consumers have the opportunity to shop around,” Fangmeier said.

“The challenge is, how do you broaden out the effect beyond those limited services?”

KBouffard@detroitnews.com

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