Overcoming Information Asymmetry in Consumer-directed Health Plans

Consumer-centric healthcare has been extolled as the centerpiece of a new model for managing both quality and price. However, information asymmetry in consumer-directed health plans (CDHPs) is a challenge that must be addressed. For CDHPs to work as intended and to gain acceptance, consumers need information regarding the quality and price of healthcare purchases. The federal government, particularly the Agency for Healthcare Research and Quality, could function as an official resource for information on performance and comparisons among facilities and providers. Because of workforce constraints among primary care physicians, a new group of healthcare professionals called "medical decision advisors" could be trained. Academic health centers would have to play a critical role in devising an appropriate curriculum, as well as designing a certification and credentialing process. However, with appropriate curricula and training, medical decision advisors could furnish information for consumers and aid in the complicated decisions they will face under CDHPs.

(Am J Manag Care. 2007;13:173-176)

Consumers are increasingly faced with making healthcare choices based on limited information about the price and value of services. To improve consumer education:

• A new group of well-trained professionals—medical decision advisers—could help consumers to interpret highly technical healthcare information.

After a relatively quiescent period of growth during the last half of the 1990s, healthcare expenditures have spiraled upward again. Annual costs for healthcare in the United States are more than $6500 per person, and represent more than 16% of the gross domestic product.¹ Further, the costs for healthcare are expected to continue to outpace expenditures for other commodities and goods for at least the foreseeable future. Most analysts would agree that the rising costs are unsustainable and that market solutions for both employer-based and government-financed healthcare have largely failed.

Consumers rejected 2 of the main approaches responsible for the reduced rate of growth of healthcare costs during the 1990s: restricted choice of providers and primary care coordination. Although consumers were responsible for discarding these approaches, they are now the focus for new models of financing healthcare. The growth of "consumerism" in healthcare has been lauded as a way to simultaneously manage the costs of healthcare and drive a new quality paradigm.² At the heart of this new framework of healthcare delivery are consumer-directed health plans (CDHPs), such as health savings accounts. The CDHP is seen as a vehicle to reduce the "moral hazard" imposed by the current system of healthcare financing that underemphasizes consumers' role in their healthcare choices. By giving consumers the financial incentive to meaningfully contribute to their own medical care decisions, policy analysts believe that healthcare will become more price sensitive and quality outcomes will receive more scrutiny.

The appetite for CDHPs appears limited–for now. Only about 4% of American workers with health benefits were enrolled in a CDHP in 2006, a rate virtually unchanged from 2005.³ When offered a choice, fewer than 20% of workers elect CDHPs, instead choosing more expensive, lowdeductible plans such as health maintenance organizations (HMOs) and preferred provider organizations.⁴ Nonetheless, employers appear undaunted in their efforts to promote CDHPs, and current trends may lead to future growth. Almost 40% of enrollees report that CDHPs were the only plan offered by their employers.⁴ Thus, rather than rely exclusively on benefit managers to determine quality and price in healthcare, the burden of decision making is being shifted to employees. With this new model of healthcare, consumers need to be provided with information to make informed choices regarding price and value.

Information Asymmetry

At the heart of the shift in healthcare financing strategies from employer/government to employee/beneficiary is the concept of providing information about price and quality. However, information asymmetry–the gap in knowledge between consumers and professionals regarding price and quality–is inherent in the healthcare marketplace. Because of this gap, understanding and interpreting performance metrics of physicians, hospitals, and health plans can be difficult.

Healthcare metrics for making choices about price and volume are especially complicated by imprecise risk adjustment, the relative infrequency of meaningful outcomes, and the broad range of performance domains. Even when these challenges can be addressed, appropriate data often are unavailable. The technical nature of healthcare processes and outcomes is responsible, and puts some consumers at a particular disadvantage. For example, there is evidence that the poor, the elderly, and those with multiple comorbidities all have lower health literacy rates.⁵ Further, health literacy deficits have been associated with worse healthcare outcomes, such as in diabetes mellitus.⁶ Thus, it is not surprising that adult literacy has been shown to be a major factor in explaining health disparities among low-income, under-represented minorities.⁷

Will Consumers Make Cogent Decisions?

Given the impact of adequate data and comprehension on healthcare choices, it is striking how little information there is to suggest that consumers can, or will, use performance data to make cogent decisions about price or value–even when the data are readily available. For instance, despite the availability of provider-specific information on mortality rates from cardiac surgery, most studies suggest that consumers either do not access the information or ignore the comparisons. In Pennsylvania, fewer than 1% of patients who underwent cardiac surgery knew the patient mortality rates for their surgeon and only 12% were even aware of the availability of the information. ⁸ Even the most informed consumers may ignore data that are easily available. For example, President Clinton, when faced with a decision about his own cardiac surgery, chose an institution with a perioperative mortality rate of about 4%, almost 2-fold higher than the average. Nevertheless, there is compelling evidence of improvement in outcomes (eg, mortality rates after coronary artery bypass surgery) when performance is shared with consumers and, especially, with the providers themselves.^9,10

A fundamental principle involving CDHPs is that the influence of cost sharing will persuade consumers to make cogent decisions about their medical care. With "skin in the game," the hope is there will be more focus by consumers on performance. However, in the past, pricing information has been only a minor inducement for consumer behaviors. In the only randomized trial that involved cost sharing, financial disincentives helped to reduce inappropriate use, such as the use of antibiotics in viral illnesses,¹¹ and patients visited physicians and were hospitalized significantly less often.¹² However, the study also indicated there were down sides: hypertensive patients with high insurance coverage had better-controlled blood pressure,¹³ and low-income individuals appeared to be especially vulnerable to financial disincentives.¹⁴

Establishing a Central Resource for Information

Notwithstanding all of the problems with creating understandable performance metrics, assembling the data, and framing the information in an acceptable format, it remains to be seen how the information on performance will be delivered to consumers. Although a growing percentage of Americans utilize the Internet to access healthcare information, ¹⁵ it is less commonly used to make choices about providers or facilities.¹⁶ Not surprisingly, access to the Internet is lowest among lower socioeconomic groups and the elderly–the 2 groups most vulnerable to information asymmetry. Yet despite the inherent problems with the Internet as a resource for consumer information on performance, there are already market responses. Web sites such as Healthgrades.com provide data to compare physicians and hospitals. Healthgrades is a for-profit, publicly traded company (NASDAQ) that publishes some of its ratings for free, but requires reimbursement for more detailed reports. An evaluation of the precision of their reports found them deficient, however, with poor discrimination between hospitals for either processes or outcomes for quality of care.¹⁷ Other studies have found similar imprecision, even after narrowing the comparisons of physicians to the care of single chronic illnesses.¹⁸

Even if problems related to precision can be solved, market-based solutions for providing information about price and quality have the potential for conflict. Large healthcare concerns can sponsor web sites themselves. Consumers who are ill positioned to understand performance metrics will be equally unprepared to distinguish between the blurred lines of unbiased performance data and advertisement. If consumer-directed health purchasing is an answer to the spiraling costs of healthcare, then more rigor is needed regarding an infrastructure for information.

One solution for the information quandary may be a major role for the federal government as a central resource for healthcare information and performance comparisons. Of course, the federal government already plays this role, in part, through its sponsorship of various methodologies for comparing health plans and providers, such as the Consumer Assessment of Healthcare Providers and Systems. The latter data were formerly limited to the evaluation of health plans, but they are in the process of being expanded to include hospitals.¹⁹ Much work will need to be done to ensure precision and clarity. However, it is a step in the right direction. One agency should be officially charged with the responsibility for ensuring precision and furnishing a single home where comparisons between providers and hospitals could be assembled to help consumers navigate complicated choices. The best option, by far, appears to be the Agency for Healthcare Research and Quality (AHRQ).²⁰ The AHRQ already has comparison charts for hospitals and nursing homes available through its web site,²¹ and has constructed consumer-friendly linkages for navigating healthcare delivery systems. Nonetheless, it is likely that the AHRQ responsibility is insufficiently defined, at present, to create a home for comparing providers and hospitals that could assist most consumer groups, much less low-income groups with literacy gaps.

Training a New Workforce for Navigating Healthcare Information

Even if healthcare performance data are made available, many consumers will be left in a quandary over complicated choices and medical decisions. With low health literacy among the very groups that may be most in need of catastrophic coverage policies, it is naive to assume that these consumers will be able to negotiate the complicated web of information on performance by healthcare providers and facilities. In fact, consumers have historically suggested that they prefer to have health professionals make healthcare choices for them.²² Primary care physicians are well trained to advise consumers on these choices, and the promise of HMOs in the 1990s appeared to be in concert with this role. However, lifestyle choices and student debt have led to decreased interest in primary care careers by graduating medical students.²³ Moreover, the consumer backlash against HMOs even further discouraged a depleted workforce that was ideally positioned to marshal a consumer-centric movement. A dramatic change in the medical school curriculum and financial incentives would be necessary to reverse this decade-old trend. Such a reversal is unlikely.

Even with improvements in the availability and precision of performance data, a different approach to assist medical decision making will be necessary if CDHPs are to flourish. One such approach might be to train a new workforce of medical decision advisors, individuals especially adept at navigating medical decision making for consumers. Training as a medical decision advisor might not require the rigors of medical school; instead, other healthcare workforce professionals such as nurses and pharmacists could be eligible, although both these healthcare provider groups are facing workforce shortages, too. Perhaps this type of role would be attractive to retired healthcare workers, although this group may be of insufficient size or interest, to support consumer needs. So a new professional group of medical decision advisors may be needed to address consumer queries regarding performance data. Whether such a strategy would be cost-effective would depend on the magnitude of the salary differential between a new workforce of medical decision advisors and physicians. In addition, cost savings associated with medical decision advisors could be offset by lower productivity and unknown training expenses.

Access to a group of medical decision advisors would boost efforts to implement an era of consumerism in the US healthcare market and overcome the underlying information asymmetry. However, the role of these healthcare professionals should not be left to the marketplace. Like other healthcare providers, medical decision advisors should be subjected to a process of credentialing. Otherwise, consumers would be further confused by market-generated professional choices. Academic health centers should play a major role in devising an appropriate curriculum, designing a certification and credentialing process, and establishing a set of responsibilities for performance expectations.

Although the idea of a newly trained workforce of healthcare professionals to advise patients on medical decisions may seem far-fetched, there may be lessons to learn from nonproviders in other areas. For instance, genetic counselors do not deliver clinical care; instead, they counsel clients regarding complicated decisions related to genetic information and risk. Their training programs stress critical thinking, communication skills, and counseling methods. A similar, more generalist curriculum could be constructed for training medical decision advisors, whose chief role would be to furnish advice, provide critical thinking about decisions, and counsel patients about choices in a marketplace based more on performance. Clearly, if consumers are to make judgments about price and quality in the coming years, the current provider workforce will be stretched to furnish the appropriate counseling needed to make those difficult choices.

Author Affiliation:

From the School of Medicine, Virginia Commonwealth University, Richmond, Va.

Correspondence Author:

Sheldon M. Retchin, MD, MSPH, 1012 E Marshall St, PO Box 980549, Richmond, VA 23298-0549. E-mail: retchin@mcvh-vcu.edu.

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