Dive Brief:
- At a roundtable held by Alliance Health Reform, executives spoke highly of a new model for paying for services, known as reference pricing, under which health plans establish a standard price for drugs, procedures, services or service bundles, and require members to pay charges beyond the set amount.
- A California-based Anthem Blue Cross executive reported that when the plan set up a value-based purchasing design for hip and knee replacements, hospital costs ranged from $15,000 to $110,000 with very little difference in quality.
- The plan set a reference price of $30,000, which resulted in a 17.9% decrease in total cost for joint replacements as well as a reduced rate of general infections in designated hospitals.
Dive Insight:
Members will almost certainly go where the care is cheapest, but making them do the research ahead of time may be a tougher sell than it sounds. Aside from a small cadre of sophisticates who advocate for themselves vigorously, the U.S. consumer has yet to become used to taking control of prices, and some actually fear having to wade their way through the system. For reference pricing to work, health plans will have to do a lot of educating, to increase members' confidence that they can successfully interpret price and quality information.