A Potent Recipe for Higher-Value Health Care

As health care costs continue to rise and consume a higher percentage of employer and household budgets, employers and consumers are looking for ways to get better value care—high-quality care at a more affordable price. This pursuit of higher value is frequently hindered by a lack of easily accessible and useful information about the quality, price, and medical necessity of health care services. Some health care experts advocate for greater quality and price transparency as a building block for a higher-value health care system. Yet transparency is only part of the value equation. When employers and other health care purchasers pair transparency with consumer incentives and clinical evidence, consumers receive higher-value care. This paper examines current obstacles to quality and price transparency and highlights ways to motivate consumers to shop for care based on value. It examines initiatives that meld consumer incentives with greater transparency including: reference and value pricing; tiered and narrow networks; centers of excellence contracting; and Value-Based Insurance Design. The synergies gained when blending quality and price transparency with evidence-based consumer incentives should lead to an increase in the use of higher-value care and clinically appropriate services delivered in the most appropriate venue. In turn, this should also lead to a decrease in inappropriate and potentially harmful medical expenditures.