Sign Up for Email Alerts Visit us on Twitter Visit us on Facebook Visit us on YouTube Subscribe to RSS Feeds


Home > Past Briefings > Briefing Detail Page
 

Briefing Detail Page

Change Text Size:   Smaller Text Size   Larger Text Size   Default Text Size    

Reference Pricing: Will Price Caps Help Contain Healthcare Costs?


Monday, November 18, 2013

Many employers have begun to adopt a strategy known as "reference pricing" to help reduce health care costs. Under this benefit design, employees get insurance plans that set price caps on certain services and procedures. Enrollees are allowed to use any provider. But if they use providers with fees higher than the "reference price," they must pay the difference between the reference price limit, determined by the employer or insurer, and the actual charge.

Reference pricing can help raise awareness among patients about price differences across service providers, and exert competitive pressure on high-cost providers to bring down their prices. But questions remain about this benefit design and the problems it aims to solve. Evidence has shown that reference pricing can lower costs and increase value in prescription drug plans, but what about medical and surgical services? Are there certain procedures in which reference pricing is likely to be more effective? What are the challenges to employers, insurers, and providers? What concerns might employees have under this design? Are there lessons for public coverage plans in this experience?

A distinguished panel of experts addressed these and related questions.

Andréa Caballero, program director at Catalyst for Payment Reform, provided an overview of reference pricing, how it works and what some of the challenges are.

Theresa Monti, vice president at Total Rewards at Kroger, discussed Kroger's experience with implementing reference pricing.

David Cowling, chief of the Center for Innovation at California Public Employees' Retirement System, discussed CalPERS' reference pricing program and its projected savings.

Michael Belman, medical director at California WellPoint, discussed the role of insurers in reference pricing and their various partnerships with employers.

Ed Howard of the Alliance moderated the discussion.


Follow the briefing on Twitter: #ReferencePricing

Contact: Marilyn Serafini (202) 789-2300 mserafini@allhealth.org

The event was sponsored by the nonpartisan Alliance for Health Reform and WellPoint.

Transcript, Event Summary and/or Webcast and Podcast

Transcript: Full Transcript (Adobe Acrobat PDF), 11/18/2013
Full Webcast/Podcast: Full Video from C-SPAN

Speaker Presentations

Belman Presentation (Adobe Acrobat PDF), 11/18/2013
Caballero Presentation (Adobe Acrobat PDF), 11/18/2013
Cowling Presentation (Adobe Acrobat PDF), 11/18/2013
Monti Presentation (Adobe Acrobat PDF), 11/18/2013

(If you want to download one or more slides from these presentations, contact us at info@allhealth or click here for instructions.)

Source Materials

Agenda (Adobe Acrobat PDF), , 11/18/2013
Materials List (Adobe Acrobat PDF), , 11/18/2013
Source List (Adobe Acrobat PDF), , 11/18/2013
Speaker Biographies (Adobe Acrobat PDF), , 11/18/2013

Offsite Materials (briefing documents saved on other websites)

Employers Test Plans That Cap Health Costs, The New York Times, 6/23/2013
Reference Pricing and Bundled Payments. A Match to Change Markets. (Adobe Acrobat PDF),Catalyst for Payment Reform; Health Care Incentives Improvement Institute, 10/1/2013
From Reference Pricing To Value Pricing (Adobe Acrobat PDF),Catalyst for Payment Reform, 1/1/2013
Stunning Results from California, National Center for Policy Analysis, 8/7/2013
Quality Matters. Health Care Price Transparency: Can It Promote High-Value Care?, The Commonwealth Fund, 4/1/2012
Closing the Gap: Reducing Price Variance in Health Care with Reference-Based Pricing, Castlight Health, 7/1/2012
Bending the Cost Curve with Reference Pricing, The Health Care Blog, 7/27/2013
Hospital Ratings are in the Eye of the Beholder, Kaiser Health News, 3/18/2013
Reference Pricing: Stimulating Cost-Conscious Purchasing and Countering Provider Market Power (Adobe Acrobat PDF),National Institute for Health Care Management, 10/1/2013
The Sleeper in Health care Payment Reform, The New York Times, 8/2/2013
Towers Watson/NBGH Employer Survey on Purchasing Value in Health Care, Towers Watson, 3/7/2013
High and Varying Prices for Privately Insured Patients Underscore Hospital Market Power, Center for Studying Health System Change, 9/1/2013
Hospital Quality Reporting: Separating the Signal from the Noise, National Institute for Health Care Reform, 4/1/2013
Ensuring Competitive Markets for Health Care Services (Adobe Acrobat PDF),Catalyst for Payment Reform, 1/1/2013
Wide Variation in Hospital and Physician Payment Rates Evidence of Provider Market Power, Center for Studying Health System Change, 11/1/2010
A Systematic Review of Reference Pricing: Implications for US Prescription Drug Spending, American Journal of Managed Care, 11/1/2012
Price Transparency (Adobe Acrobat PDF),Catalyst for Payment Reform, 1/1/2013
Payers Test Reference Pricing And Centers Of Excellence To Steer Patients To Low-Price And High Quality Providers, Health Affairs, 9/1/2012
Increases in Consumer Cost Sharing Redirect Patient Volumes and Reduce Hospital Prices For Orthopedic Surgery, Health Affairs, 8/1/2013

Photos

Reference Pricing shines a spotlight on unwarranted cost variation, Andréa Caballero, program director at Catalyst for Payment Reform, stated at a November 18 Alliance briefing: Reference Pricing: Will Price Caps Help Contain Healthcare Costs?


Reference pricing saves money for patients on their co-payments and for insurers, which then impacts premiums they charge, Michael Belman, medical director at California WellPoint, stated at a November 18 Alliance Briefing, Reference Pricing: Will Price Caps Help Contain Healthcare Costs?

 


Uwe Reinhardt Questions Bundled Payment Savings Prospects


Video (2:58)

A new Alliance for Health Reform video features Princeton’s Uwe Reinhardt questioning whether bundling payments for medical services might actually lead to higher – not lower – costs.

"The ACO's, the accountable care organizations, could create local monopolies that could dictate to you what that bundled price would be, and some of us fear that bundled prices might be even more than what the fee-for-service for that bundle would be today. … You really should align all the payers and say, 'Let us jointly negotiate with the ACOs what those bundles should be so that they cannot divide and rule and sort of make us on the buy side weak.'"

FULL TRANSCRIPT

Read More 


Sister Carol Keehan on Health Law Enrollment Challenges this Year


Video 3:00

A new Alliance for Health Reform video features Sister Carol Keehan of the Catholic Health Association of the United States addressing the challenges of quickly enrolling millions of Americans for health insurance this fall. Open season begins October 1 of this year, yet she says that up to 85 percent of those who will be newly eligible for Medicaid or for subsidies to buy private insurance in state-based exchanges don't know it.  FULL TRANSCRIPT

Read More 


Jonathan Blum on CMS Efforts to Keep Medicare Spending Growth Down


Video (2:54)

Jonathan Blum, acting principal deputy administrator and director of the Center for Medicare at the Centers for Medicare and Medicaid Services (CMS), addresses the slower growth of Medicare spending over the last few years, and what his agency is doing to try and continue the trend. “There are promising signs that this strategy to change the payment system, to change the payment models, to focus on waste and abuse, is paying off," he said. "We are taking a whole new approach to addressing fraud in the program. Much more data resources, much more on the ground reaction. We have seen dramatic spending declines in areas of spending, such as home health and durable medical supplies that historically fueled lots of the fraud.”  FULL TRANSCRIPT

Read More 


Two Former Medicare Administrators Discuss How to Save the Program


A new Alliance for Health Reform video features two former Medicare administrators -- Gail Wilensky and Bruce Vladeck -- on their ideas about how to save the program.

Ms. Wilensky, who ran Medicare in a Republican administration, argued for increasing the eligibility age of Medicare for future retirees, while still making the program available at age 65 for those who are disabled.

Watch at http://www.youtube.com/watch?v=GQjsfam9-w0

Read More 


Douglas Holtz-Eakin: Health Care Spending Lull Only Temporary


Video (3:11)

A new Alliance for Health Reform video features Douglas Holtz-Eakin of the American Action Forum, and a former director of the Congressional Budget Office, arguing that recent slower spending growth in health care won’t continue.

"We also saw a slowdown in the mid-90s, and we all declared victory and it came right back. I think next year we’ll see a noticeable uptick. There will be lots of new people entering the insurance markets because of the exchanges and the subsidies that come along with them, and those subsidies are very generous. … These are an invitation for people to get coverage and to buy more health care. I think that’ll place a lot of pressure on spending."

FULL TRANSCRIPT

Read More 

Marketplace Enrollment Helpers Toolkit


Beginning October 1, insurance marketplaces open for enrollment, and millions of people will be eligible to purchase plans. To guide them in the application process, the federal government has invested in programs to train community organizations and hired staff.

Read More 

The Employer Mandate of the Patient Protection and Affordable Care Act


The Toolkit, available here, details the ACA’s employer requirements and penalty. It also includes information about the delay in the mandate to 2015, and analysis about its impact on employer-based coverage.

Read More 

Toolkit: Replacing the SGR


An Alliance for Health Reform Toolkit summarizes the recent policy debate surrounding the decade-long problem In the last six months, the House Energy and Commerce Committee, House Ways and Means, and Senate Finance committees all put forth similar bills to repeal and reform the flawed Medicare physician payment formula. Further, with the CBO estimating the cost of repeal at $116.5, the lowest since 2006, many health policy experts are speculating that 2014 is the year that policymakers enact a permanent change to the SGR.

Read More 

Toolkit: Training the Workforce for a Changing Health System


A new Alliance for Health Reform toolkit addresses concerns about whether newly-trained physicians are adequately prepared for today's evolving health care delivery system. Does training adequately emphasize care coordination, team-based care, costs of care, health information technology, cultural competence and quality improvement? Does it encourage students to practice in a primary care setting?

Read More 

Copyright 1997-2014 Alliance for Health Reform
1444 Eye Street, NW, Suite 910 Washington, DC 20005-6573      202-789-2300      202-789-2233 fax      info@allhealth.org      Sitemap