Shared Savings

Shared savings is an arrangement where, when a member chooses a lower-cost option for care, part of what the plan saves goes back to the member. The share is paid as cash, a deposit into a health savings account, a lower deductible, or a bonus. It is also the name of a Medicare program that pays provider groups a share of what they save, but on the employer side it almost always means the member reward.

The reason employers do it is that the savings are large enough to split. If the plan's in-network rate for an MRI is $1,800 and a member chooses a $450 imaging center, the plan saves $1,350; paying the member $200 of that still leaves $1,150. Texas, Tennessee, and a few other states have gone further and require insurers to offer shared savings programs on certain shoppable services. Programs work when the reward is immediate and visible, the options are shown side by side with quality data, and the member doesn't have to fill out a form to collect. They fail when the reward arrives months later or the member never hears about it.

The takeaway: if your plan offers shared savings, use it every time you have a scheduled test or procedure. If it doesn't, ask your employer why the plan would rather pay $1,800 than $650.