But it may be difficult to repeat those results elsewhere, wrote the center's Amanda Lechner, Rebecca Gourevitch and Paul Ginsburg. Meanwhile, the financial incentive that reference prices create to avoid high-priced hospitals may be undermined by the Affordable Care Act.
Few employers have the clout of CalPERS—the nation's second-largest health benefit buyer with $7 billion in annual health spending—and hospitals that charge more than a reference price may not affect the price paid by smaller employers, the report said.
The ACA, meanwhile, sets a maximum on what insured patients must pay out of their own pockets for care at $6,350 for individuals and $12,700 for families. That reduces the financial incentive for patients to avoid high-priced hospitals because they would no longer be exposed to the full cost of care above the reference price.
For example, CalPERS set a reference price of $30,000 but its claims analysis shows the highest-price provider for hip and knee replacements charged $110,000.
The report said that CalPERS is waiting to hear from federal officials on whether reference pricing would be excluded from the ACA out-of-pocket maximums.
Reference pricing has so far been used with services for which there is little variation in quality or sufficient quality data to help determine which providers are high-value, not just low-cost, the report said. So far, CalPERS has expanded its use of reference prices to outpatient colonoscopies, cataract surgery and arthroscopy. Safeway has expanded its reference prices from pharmaceutical drugs to imaging, laboratory tests and diagnostic colonoscopies.
That has not made a significant dent in CalPERS spending, however. Savings for hip and knee surgery accounted for 0.26% of spending among those covered by Anthem.
The strategy “appears to have limited potential to address cost trends broadly because it focuses on individual service lines and may be best suited for a limited number of services that drive significant spending,” the authors wrote. “Moreover, reference pricing which relies on fee-for-service payment, does not address unnecessary utilization.”
They note that the broader approach of accountable care organizations, which tie financial incentives to quality and spending targets, may prove more successful at promoting more efficient care.
Follow Melanie Evans on Twitter: @MHmevans
