Paying Patients to Switch: Impact of a Rewards Program on Choice of Providers, Prices, and Utilization

One barrier to health care price shopping is the presence of insurance, which distorts patient incentives to shop. As a solution, employers and insurers are experimenting with changes to benefit design that encourage patients to switch to lower-priced providers. One increasingly popular strategy is to use financial incentives to reward patients who receive care from lower-priced providers. We evaluated the impact of a rewards program implemented in 2017 by 29 employers with 269,875 eligible employees and dependents. For 125 elective services, patients who receive care from a designated lower-priced provider receive a check ranging from $25 to $500 depending on the provider’s price and service. Among these services, in the first 12 months of the program, we find a 2.1 percent reduction in prices. Total savings from reductions in prices were $2.3 million, or roughly $9 per person per year. These effects are primarily seen in MRIs and ultrasounds and with no price reduction among surgical services.