@patriciaborns Introducing another trending word in healthcare cost reduction: Reference pricing. The idea being vetted by insurance companies and benefits managers is to encourage consumers to choose lower-cost healthcare providers for specific services by making them pay more for the higher cost option.
The basis for the idea is a highly publicized study by the California Public Employees' Retirement System (CalPERS) in which a price point of $30,000 was set for standard hip and knee replacements, and enrollees in CalPERS health plans were encouraged to providers who charged less than that price, reports Kaiser Health News. Anthem Blue, a Blue Cross Blue Shield insurance company, helped to create the reference pricing structure.
The CalPERS program designated certain hospitals that met the cost threshold. Enrollees who chose those facilities paid only the plan’s typical deductible and coinsurance up to the out-of-pocket maximum. Patients who chose other hospitals were responsible for regular cost sharing plus “all allowed amounts exceeding the $30,000 threshold, which are not subject to an out-of-pocket maximum,” even though the hospitals were in the plan's network, says KHN.
The results showed savings of $2.8 million for CalPERS, and $300,000 in patients’ cost sharing, according to research released by the non-profit group National Institute for Health Care Reform. The study also showed the reference pricing initiative motivated some hospitals to reduce prices for joint replacements.
The price control program appears to work well for routine services such as medications and lab tests, and on standard procedures like the joint replacements.
Some of the reported problems with the study included the hospitals' lack of price transparency for consumers, making it harder for them to estimate their out of pocket costs, and a limited emphasis on quality of the service provided. Read more.