At the beginning of 2022, the University of Central Oklahoma gave its employees a new benefit: $0 deductibles for medical procedures and services if they chose a hospital or provider in MDsave’s exclusive network.
When open enrollment for the 2023 benefit year started, insurance broker Jessica Beames learned just how popular the benefit was.
“Are we still getting access to our $0 bundles?” Beames, a consultant with BOK Financial Insurance, says that’s a question she got asked all the time because it makes a significant financial impact for members.
Both the university and its employees get transparent pricing—and lower prices—for procedures and services purchased through MDsave, an online marketplace for prepaid medical procedures and services.
Charlie Byrge, the chief operating officer with MDsave, says the demand from employees “shows the power of partnerships to create solutions that work for everyone.”
“For providers looking to increase patient volume, employers wanting to offer competitive benefits, and patients looking for upfront transparent pricing so they can get the care they need, MDsave provides the connection point for all stakeholders,” Byrge says.
An Evolving Business Model
Based out of Brentwood, Tennessee, MDsave started about 10 years ago.
The company’s goal was to help health systems attract self-pay customers shopping for a discounted bundle of services, such as a colonoscopy or an MRI scan. Patients benefitted from being able to compare prices online, and they received discounted prices for prepaying.
MDsave’s clients—hospitals and health systems—were able to better compete against the typically lower costs offered by imaging centers and outpatient surgery centers.
That line of business still exists. Self-pay patients can shop on MDsave’s website for more than 2,000 fully bundled procedures at more than 340 hospitals across the country. But as the health care purchasing landscape has changed, so has MDsave’s business model.
“As we’ve grown as an organization and self-funded employers have wanted to partner with us, we need to become a one-stop shop,” Byrge says. “In markets where we do not have a health system partner, we are bringing on imaging centers and surgery centers so we offer all types of provider organizations.”
The MDsave for Employers platform offers health care bundles at discounted prices, but the network and range of procedures and services offered is much different. While health systems tend to limit the bundles available on the public site to routine, lower cost services, they list more complicated procedures—joint replacements, labor and delivery services, and much more—on the employer platform.
MDsave partners directly with a handful of employers or unions that have password-protected access to its platform. But most of the “shoppers” using MDsave for Employers are health care navigators, member experience platforms, and other parties hired by employers to help their employees make the best purchasing decisions.
Because MDsave’s bundled prices are lower than those available through their insurance network, employers waive an employee’s deductible to incentivize them to choose an MDsave provider.
How MDsave Works
MDsave does not currently charge employers for access to its employer platform, though Byrge says that will change in the future as its premium network is developed. The company makes money from its per-transaction business model with provider organizations—health systems, surgery centers, imaging centers, and laboratories—and its contracts with health care navigation firms. This business model works well for its provider partners as MDsave adds a simple “plus up” to the final negotiated price for a bundle of services.
Here’s how it works:
MDsave works with each independent provider to create a bundled episode of care. For instance, that bundle might include the anesthesiologist fee, the physician fee, the pathology fee, and the facility fee associated with a colonoscopy. The consumer only sees the final price that includes all components of the procedure as well as MDsave’s fee.
MDsave’s bundling system protects employers and patients from unexpected bills. Instead of listing dozens of CPT codes for specific colonoscopy procedures, each health system posts a single price for a colonoscopy. This is how MDsave “consumerizes” health care for its medical providers.
That approach protects employers from getting an extra bill if, for example, a colonoscopy needs to include a polyp removal.
“We set that price in stone, and employers absolutely love it,” Byrge says. “More than the cost savings, we are told that the cost consistency is what they value most.”
Immediately after a medical service is performed, MDsave adjudicates the bundle-of-care bill and pays each of the providers and facilities.
Meanwhile, employers are invoiced by MDsave according to the terms of their contract — generally one monthly invoice for all the services purchased by its employees through MDsave.
A Useful Ally
The University of Central Oklahoma provides benefits to about 1,600 employees. It wanted to start direct-contracting with providers to enhance its benefits and reduce the unpredictability associated with traditional health care purchasing.
“Many employers are struggling financially with the increasing cost of care,” says Beames, who consults with the university on its benefits. “To be able to expand access to care while providing a first-dollar benefit like this to their employees is really impactful.”
She recommended MDsave to the university for two reasons. The first was its pricing methodology; MDsave receives a transaction fee from providers for each service purchased.
“Its competitors may charge a percentage of savings for the self-funded employer to provide access to the services, which erodes the overall financial benefit to the employer,” she says.
The second reason is MDsave’s ability to display provider-specific quality data as opposed to general data on facilities or sites of care. This empowers patients to make informed decisions regarding their care based on quality data that is often unavailable or difficult to find in the broader consumer marketplace.
The Path Ahead
MDsave’s focus is on growing its network so it can serve more employers and provide more employee access to care in more markets.
The company started in 2022 with 330 health system partners and about 1,700 locations. By the end of the year, it had contracted with a national imaging partner that added 2,500 imaging facilities to the MDsave network. It also partnered with a national surgery chain, which will further bolster its network by the end of 2023.
Other deals are in the works, Byrge says, including the addition of a large group of academic medical centers that want direct-contracting relationships with employers.
“Our vision is to become a one-stop shop for employers,” Byrge says.